Ascion, LLC v. Tempur Sealy International, Inc. et al

Filing 312

OPINION AND ORDER: 1) Reverie's motion to compel access to source code ( 174 , 300 ) is DENIED; 2) Reverie's 311 Motion for Hearing is DENIED; and 3) The parties SHALL FILE any dispositive motions and/or Daubert motions within 30 days of entry of this order. Further, the parties may file responses and replies to these motions in accordance with the Local Rules. Signed by Judge Karen K. Caldwell on 4/29/2024. (STC)cc: COR

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
CENTRAL DIVISION AT LEXINGTON
ASCION, LLC, d/b/a REVERIE,

CASE NO. 5:17-CV-403-KKC

Plaintiff,
V.

OPINION AND ORDER

TEMPUR SEALY INTERNATIONAL,
INC., f/k/a TEMPUR-PEDIC, et al.,
Defendants.
*** *** ***
This matter is before the Court on the plaintiff’s motions to compel access to source
code (DEs 174, 300) and hearing. (DE 311.) For the following reasons, the Court will deny
both motions.
I.

Background
This action was filed back in 2015. Ascion, LLC d/b/a Reverie (“Reverie”) alleges that

Tempur Sealy International, Inc., f/k/a Tempur-Pedic (“Tempur”) has infringed patents
relating to controllers for their adjustable beds. On November 3, 2016, Tempur informed
Reverie that LOGICDATA GmbH possessed and owned the relevant source code of the
accused products. (DE 302 at 2.) Five years later, and six months before the Court ordered
that fact discovery conclude, in January 2022, Reverie made its first attempt to gain access
to the relevant source code.
Reverie, however, subpoenaed the wrong entity to produce the source code. It
subpoenaed LOGICDATA North America (“LDNA”), a subsidiary of LOGICDATA GmbH
that did not have possession or ownership of the requested source code. Nevertheless,
LDNA worked to comply with the subpoena and eventually was able to gain access to the
source code from its parent company. It informed both Reverie and Tempur that the source

code would be available for review between March 17, 2022 and March 31, 2022, the
deadline for fact discovery. Tempur’s expert managed to review the source code during this
time, but Reverie’s expert did not.
Reverie asserts that its previously retained expert was unavailable to review the
source code during the March 17 to March 31 period. It was further unable to employ the
services of another expert until April 4, 2022. (DE 300-2 at 5.) The following day, it moved
the Court to grant a limited extension of time to conduct fact discovery, but, for whatever
reason, failed to specify its need to review the source code. (See generally DE 158.) The
Court granted this request subject to some limitations. (DE 162.)
Reverie, despite employing a new expert to review the source code in early April, did
not disclose his identity to LDNA pursuant to the agreed protective order until April 21,
2022. The protective order governing conduct during fact discovery entitles the producing
party’s attorney to a clearance period of seven business days to file objections to an expert
receiving access to the relevant source code. This meant that LDNA had until May 2, 2022
to file any objections to Reverie’s newly employed expert. While LDNA’s counsel ultimately
had no objections to Reverie’s expert, it declined to grant access to the source code in part
because the deadline for extended fact discovery had passed when the clearance period
ended. Reverie then “communicated to both [LDNA] and Tempur its intention to move to
compel review of the source code[.]”1
II.

Analysis
Reverie argues that the Court should compel access to the source code and grant

As of this date, Reverie has not filed a motion to compel access to the relevant source code in the
record. Instead, it directs the Court to a joint statement of positions (DE 174), which was intended to
resolve whether a motion to amend the scheduling order or a motion to compel was most appropriate
in these circumstances. For the purposes of this opinion, the Court will construe Reverie’s
memorandum (DE 300) and previous arguments as a motion to compel access to the source code.
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additional time for review because: (1) the source code is relevant; (2) Reverie was diligent
in seeking access to the source code; (3) granting the request would not result in prejudice;
and (4) Reverie was entitled to review the source code during the expert discovery period.
(DE 300.) Neither party argues that the source code is irrelevant to the underlying claims.
Tempur, however, argues that the Court should deny Reverie’s requests because: (1)
Reverie was not diligent in seeking access to the source code; (2) granting access to the
source code would result in prejudice to Tempur; and (3) Reverie was not entitled to review
the source code during the expert discovery period. (DE 302.)
Functionally, Reverie seeks to modify the previous scheduling order (DE 147) and
reopen fact and expert discovery to review the source code. “A scheduling order maintains
orderly proceedings and is not a frivolous piece of paper, idly entered, which can be
cavalierly disregarded . . . without peril.” Century Indemnity Co. v. Begley Co., 323 F.R.D.
237, 240 (E.D. Ky. Jan. 3, 2018). “A schedule may be modified only for good cause and with
the judge’s consent.” Fed. R. Civ. P. 16(b)(4). “In order to demonstrate good cause, the
[movant] must show that the original deadline could not reasonably have been met despite
due diligence and that the opposing party will not suffer prejudice by virtue of the
amendment.” Ross v. Am. Red Cross, 567 Fed.Appx. 296, 306 (6th Cir. 2014).
A.

Diligence Regarding Access to Source Code

The Court finds that Reverie was not diligent in seeking access to the source code
and meeting the scheduling order’s deadlines. Reverie has known about the source code
since 2016 at the latest. (DE 302 at 6–7.) It did not attempt to subpoena the source code
until January 2022, and then it subpoenaed the wrong entity. Because Reverie failed to
subpoena the correct entity, LDNA was forced to seek access to the source code from its
parent company, which is headquartered in Austria. Reverie’s argument that LDNA
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“dragged its feet on producing the code” is rather disingenuous given that it subpoenaed an
entity that did not possess or own the relevant source code in the first place. (DE 300 at 3.)
Nevertheless, even if the Court gives Reverie the benefit of the doubt and looks only
to the extended April 30, 2022 fact discovery deadline, Reverie was still not diligent seeking
access to the source code. Reverie asserts that it was not able to hire a suitable expert until
April 4, 2022, but it did not disclose the expert to the producing party—in this case,
LDNA—until April 21, 2022. Under the express terms of the protective order that Reverie
itself agreed to, producing parties have seven business days to file objections to any experts
who will access and review the source code. (DE 44 at 15.) Accordingly, as of April 21, 2022,
LNDA was entitled to have seven business days to file any objections. That LNDA
ultimately did not file objections is irrelevant; it had those seven business days to
investigate Reverie’s expert and make an informed decision.
In its memorandum, Reverie states that “[LDNA] refused to consider Reverie’s
request to expedite the clearance period under the protective order until the time for
objection to the expert under the protective order had expired, which was after April 30, the
close of discovery.” (DE 300 at 4.) Such a claim is misleading. LDNA was under no
obligation to entertain Reverie’s alleged request to expedite the clearance period. There is
no mention of an expedited clearance process in the protective order at all. It is not LDNA’s
fault that Reverie did not disclose its expert until days before the already-extended
discovery period ended. Further, LDNA cannot be faulted for utilizing the rights that
Reverie agreed to give them under the protective order. As a result, the Court cannot find
that Reverie was diligent in seeking access to the source code and meeting the scheduling
order deadlines.
B.

Prejudice to Tempur
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Reverie argues that it should be allowed access to the source code because the only
prejudice in this case has been to itself. (DE 300 at 10.) It argues that there is no prejudice
at all to LNDA because it has already “collected, produced, and made the code available for
review[.]” (Id.) It further argues that the only real prejudice to Tempur would be “the loss of
the advantage it gained when it convinced its partner, [LNDA], to refuse Reverie access to
the source code.” (Id.)
The Court will be clear: Reverie has provided zero evidence to support its numerous
accusations of bad faith and conspiracy between LNDA and Tempur to deny it access to the
source code. The only fact that Reverie appears to hang its hat on is that LNDA and
Tempur do some business with each other. And Reverie would have this be enough to
convince the Court of misdeeds undertaken between the defendant and non-party. The
Court declines to entertain such a claim without more support.
Further, reopening discovery and granting Reverie access to the source code would
clearly prejudice the defendant. It would, as Tempur asserts, result in it having to “re-do” a
substantial amount of pretrial preparation, depositions, and dispositive motion arguments.
This would result in “several hundreds of thousands of additional dollars in attorney’s and
experts’ fees” by the time this action concludes. (DE 302 at 12–13.) Given that the Court
has found that Reverie was not diligent in seeking access to the source code, it further finds
that the prejudice against the defendant outweighs the need to reopen fact discovery.
C.

Review During Expert Discovery Period

Finally, Reverie argues that it was entitled to access the source code during the
expert discovery period. (DE 300 at 8.) In support of its argument, Reverie cites a handful of
out-of-circuit cases, the majority of which are unreported. See TQ Delta, LLC v. 2Wire, Inc.,
No. CV 13-1835-RGA, 2019 WL 1529952, at *2 (D. Del. Apr. 9, 2019); Mfg. Automation &
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Software Sys., Inc. v. Kristopher Hughes, No. 136 at 5-6, Civ 2:16-cv-08962- CAS-KS (C.D.
Cal. March 5, 2018); Dynamic Microprocessor Assocs. v. EKD Comput. Sales, 919 F. Supp.
101, 105-06 (E.D.N.Y. 1996); Juniper Networks, Inc. v. Bahattab, No. CV 07-1771
(PLF)(AK), 2008 WL 11403235, at *3 (D.D.C. Nov. 12, 2008). As Tempur notes in its
response, none of these cases are applicable to the current action.
These cases involve instances where: (1) the source code was made unavailable
during fact discovery, as in Manufacturing Automation; (2) the party seeking access had
already accessed the source code during fact discovery, as in TQ Delta, LLC; and (3) the
party seeking access had been granted leave before the end of fact discovery to pursue
access to the source code, as in Dynamic Microprocessor. Tempur correctly points out that
Juniper Networks did not involve a motion to reopen discovery at all, but instead concerned
“the appropriateness of provisions in the parties’ Protective Order[.]” (DE 302 at 12.) Here,
Reverie was not diligent in seeking access to the source code, as explained above, and
caused the deadline to expire by disclosing its new expert too late in the process.
Further, Reverie’s underlying argument is incorrect. The review and production of
source code is the subject of fact discovery, not expert discovery. Beacon Navigation GmbH
v. Bayerische Motoren Werke AG, No. 2:13-cv-11410-MAG-EAS, 2023 WL 8981689, *4 (E.D.
Mich. Dec. 28, 2023) (citing Finjan, LLC v. Qualys Inc., No. 18-cv-07229-YGR(TSH), 2020
WL 6581836, *1 (N.D. Cali. Nov. 10, 2020) (“The plain language of Rule 26 makes clear that
expert discovery means discovery of the expert, not by the expert.”)). Accordingly, there is
no justification at present to grant Reverie’s motion to compel access to the source code and
reopen discovery in this action.
III.

Conclusion
Accordingly, the Court hereby ORDERS that:
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1) Reverie’s motion to compel access to source code (DEs 174, 300) is DENIED;
2) Reverie’s motion for hearing (DE 311) is DENIED; and
3) The parties SHALL FILE any dispositive motions and/or Daubert motions within
thirty (30) days of the entry of this order. Further, the parties may file responses and
replies to these motions in accordance with the Local Rules.
This 29th day of April, 2024.

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