Valencell, Inc. v. Apple Inc.
ORDER granting in part and denying in part 155 Motion for Reconsideration. The portion of Valencells 7 April 2017 motion (D.E. 155) seeking a one-weekextension of the deadline in the courts 3 April 2017 Order (D.E. 153 1) applicable to its outsta nding supplemental document production that is not otherwise addressed in the instant Order is ALLOWED. Service of such supplemental document production effected by Valencell by 14 April 2017 shall be deemed timely. The portion of Valencells 7 April 2017 motion seeking reconsideration and withdrawal of the requirement in the courts 3 April 2017 Order that Valencell supplement its response to Apples Interrogatory No. 6 relating to Valencells damages claim is DENIED. Valencell shall serve a comple te, supplemental answer to Interrogatory No. 6, with a verificationfor it, as soon as practicable but in no event later than 21 April 2017. Counsel should read the order in its entirety for additional critical deadlines and information. Signed by United States Magistrate Judge James E. Gates on 4/17/2017. (Briggeman, N.)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
This case comes before the court to memorialize and elaborate on various directives
issued by the court at the discovery status conference with plaintiff Valencell, Inc. (“Valencell”)
and defendant Apple Inc. (“Apple”) held on 13 April 2017 and to resolve various matters
remaining in dispute.
Directives regarding Discovery Requests to Valencell
The portion of Valencell’s 7 April 2017 motion (D.E. 155) seeking a one-week
extension of the deadline in the court’s 3 April 2017 Order (D.E. 153 ¶ 1) applicable to its
outstanding supplemental document production that is not otherwise addressed in the instant
Order is ALLOWED. Service of such supplemental document production effected by Valencell
by 14 April 2017 shall be deemed timely.
The portion of Valencell’s 7 April 2017 motion seeking reconsideration and
withdrawal of the requirement in the court’s 3 April 2017 Order that Valencell supplement its
response to Apple’s Interrogatory No. 61 relating to Valencell’s damages claim is DENIED.2
Apple’s Interrogatory No. 6 reads: “Describe the factual basis for Your contention that You are entitled to recover
damages, including at least the amount of damages you seek, the legal theory(ies) on which you base your damages
claim (e.g., lost profit damages, reasonable royalty damages, some other form of damages, or some combination of
Valencell shall serve a complete, supplemental answer to Interrogatory No. 6, with a verification
for it, as soon as practicable but in no event later than 21 April 2017. The supplemental answer
shall reflect such inquiry by Valencell into the information within its possession, custody, or
control regarding its damages claim, including consultation with its damages expert, as
necessary, to provide a complete response as of the time it serves its supplemental answer. See
Fed. R. Civ. P. 26(g)(1).
In making this ruling, the court rejects Valencell’s contention that this interrogatory is a
request that Valencell produce the report of its damages expert prematurely. Rather, it is a
proper inquiry into Valencell’s current position regarding its damages claim, which is, of course,
subject to possible supplementation as discovery progresses. The fact that the information
sought may entail contentions and opinions, including expert opinions, does not render it
impermissible. SPH Am., LLC v. Research in Motion, Ltd., No. 13CV2320 CAB (KSC), 2016
WL 6305414, at *4 (S.D. Cal. 16 Aug. 2016) (rejecting plaintiff’s argument that it was unable to
respond to interrogatory concerning damages as premature in part because “[u]nder plaintiff's
theory, any contention interrogatories seeking information on damages would be rendered almost
useless as they would not require responses until the eve of the close of discovery”); Honeywell
Int’l Inc. v. Furuno Elec. Co., No. 09-CV-3601 MJD/TNL, 2013 WL 2385224, at *4 (D. Minn.
30 May 2013) (allowing motion to compel damages interrogatory in patent case holding that
contention interrogatories related to damages theories and calculations “‘almost invariably will
comport with the requirements of Rules 26(b)(1) and 33(c) . . . , seeking as they do, information
about an inherent element of a claim’” and noting that plaintiff could supplement its response
the foregoing), a detailed showing of how you compute your claimed damages and the figures used in this
computation, and the earliest date from which You contend you are entitled to damages from Apple.”
The Clerk is DIRECTED to terminate the motion at D.E. 155 as allowed in part and denied in part.
after obtaining an expert report) (quoting U.S. ex rel Tyson v. Amerigroup Ill., Inc., 230 F.R.D.
538, 544 (N.D. Ill. 2005)). Supplementation by Valencell at this late stage of fact discovery is
certainly appropriate. It is inconceivable that Valencell does not now have more responsive
information regarding its damages claim than it has provided in its prior responses to
Interrogatory No. 6, which gave very little, if any, insight into its damages claim. Woods v.
DeAngelo Marine Exhaust, Inc., 692 F.3d 1272, 1280 (Fed. Cir. 2012) (“This court has
recognized that answers to contention interrogatories evolve over time as theories of liability and
defense begin to take shape; answers to those interrogatories may not come into focus until the
end of discovery. . . . Rule 26(e) requires that as theories mature and as the relevance of various
items of evidence changes, responses to interrogatories, and particularly contention
interrogatories, be corrected or supplemented to reflect those changes.”).
supplementation at this point would prejudice Apple and likely delay discovery proceedings.
The court DENIES without prejudice Apple’s request that Valencell be compelled
to respond further to Apple’s Request for Production No. 673 regarding Valencell’s efforts to
obtain funding from investors; Request for Production No. 694 regarding research and
development costs incurred by Valencell; and Request for Production No. 755 regarding initial
public offerings by Valencell. While it is conceivable that the documents sought by each of
these production requests could contain information relevant to one or more issues in this case,
Apple’s Request for Production No. 67 seeks “[a]ll documents regarding Valencell’s attempt to secure funding
from actual or potential investors, including but not limited to any presentations, business analyses, or other
‘roadshow’ documents presented to investors.”
Apple’s Request for Production No. 69 seeks “[d]ocuments sufficient to identify and describe the research and
development expenses associated with the Relevant Valencell Instrumentalities.”
Apple’s Request for Production No. 75 seeks “[a]ll documents concerning any contemplated or planned initial
public offering by Valencell, including but not limited to financial information, analyses and projections; the
Relevant Valencell Instrumentalities or the Asserted Patents; and communications with underwriters, advisors,
consultants, and investors.”
the record does not presently show that they are likely to do so. At the same time, the production
sought by each production request is extensive, the burden on Valencell of making the
production significant, and the intrusion into Valencell’s operations entailed by the production
substantial. The production sought therefore fails to meet the proportionality standard of Fed. R.
Civ. P. 26(b)(1). The denial is without prejudice because information could conceivably be
developed through future investigation or discovery, including depositions, showing that the
production sought is warranted at that time.
Apple’s request that Valencell be compelled to answer more fully Apple’s
Interrogatory No. 46 seeking information about products practicing the patents in suit is
Valencell shall serve a supplemental answer to Interrogatory No. 4, with a
verification for it, as soon as practicable but in no event later than 21 April 2017.
supplemental answer shall provide all information sought by the interrogatory, unless after
reasonable inquiry into the information within its possession, custody, or control regarding the
matters inquired about, including consultation with its experts, Valencell determines that it lacks
possession, custody, or control over requested information.
Valencell shall explain in its
supplemental answer any claimed inability to provide requested information.
In compelling a further response by Valencell, the court finds that the information sought
is clearly relevant to issues in this case, including the value of the patents in suit. The fact that
Valencell may not maintain records containing the information sought as part of its regular
Apple’s Interrogatory 4 asks Valencell to “[i]dentify and describe in detail each product demonstrated, sold, or
offered for sale in the United States by Valencell, or a licensee to the Asserted Patents or Related Applications, that
practices any claim of the Asserted Patents or Related Applications, including the product’s commercial name and
manufacturer, the person or entity that offered to sell or sold the product, the asserted claim(s) that the product
practices, the first date the product was offered for sale, the first date the product was sold, the location of the sale or
offer for sale, all dates the product was demonstrated in the United States, and all material documents (by Bates
number) that refer to or describe each sale, offer for sale, or demonstration.”
business operations does not insulate it from answering the interrogatory. Nor does the possible
need for Valencell to consult an expert to be able to provide information sought.
Apple’s request that Valencell be compelled to answer more fully Apple’s
Interrogatory No. 57 seeking, in relevant part, information about potential agreements relating to
the patents in suit or related applications is ALLOWED. Valencell shall serve a supplemental
answer to Interrogatory No. 5, with a verification for it, as soon as practicable but in no event
later than 21 April 2017. For purposes of the instant Order, the term “potential agreement” shall
mean any agreement into which Valencell or the other party or parties to it declined to enter after
Valencell communicated to the other party or parties proposed terms for the agreement. The
description of the terms of each potential agreement shall include a description of the reasons
why the agreement was not entered into. Except as to potential agreements not entered into
because of price terms, Valencell may defer identification of the material documents that refer to
or describe any potential agreement until after it has produced the other information sought by
this interrogatory and the parties confer about whether Apple continues to seek such
identification with respect to the potential agreement. The parties shall be prepared to address at
the biweekly discovery status conference on 27 April 2017 any unresolved disputes regarding
identification of such documents.
Subject to such deferred identification, Valencell’s
supplemental answer shall respond fully to the interrogatory.
As with all interrogatories,
Apple’s Interrogatory No. 5 asks Valencell to “[i]dentify and describe in detail any agreement (or potential
agreement) that Valencell or the Named Inventors considered, negotiated, or executed (whether written or oral,
express or implied) pertaining to the Asserted Patents or Related Applications, including, by way of example only,
purchase agreements, patent assignment agreements, or exclusive or non-exclusive license agreements, and provide
the identity of all parties to each agreement; the date(s) the agreement was proposed, finalized, and executed; a
description of the terms of the agreement; a description of any payments, fees, or royalties received or paid under
each agreement; and all material documents (by Bates number) that refer to or describe each agreement.” While the
interrogatory encompasses agreements entered into, not simply potential agreements, it is the court’s understanding
that the parties’ dispute extends only to the portion of the interrogatory inquiring about potential agreements.
Although Valencell voiced concern at the status conference that Apple was asking that Valencell be compelled to
describe the terms of agreements that it had produced, Fed. R. Civ. P. 33(d) obviates any such description.
Valencell retains the option to produce business records in response to Interrogatory No. 4
pursuant to Fed. R. Civ. P. 33(d) to the extent that it permits.
In compelling a further response by Valencell to Interrogatory No. 4, the court finds that
the likelihood that the discovery regarding potential agreements will produce information
relevant to the issues in this case is sufficient to justify its scope and the burden it places on
Valencell. It is, of course, conceivable that certain potential agreements may not ultimately
prove to be relevant, such as if the reasons why the agreement was not entered into are
extraneous to the issues in this case. It is because of that possibility, in an effort to avoid
imposition of an undue burden on Valencell, that the court has provided Valencell the option of
deferring identification of documents relating to potential agreements not entered into for reasons
other than price until after conferral with Apple.
Directive regarding Discovery Request to Apple
Valencell’s request that Apple be compelled to further respond to Valencell’s
Interrogatory No. 8 is DENIED. Interrogatory No. 8 reads: “State with specificity the basis for,
and all facts and circumstances supporting or otherwise relating to, each defense and
counterclaim asserted by you in this litigation and identify all persons with knowledge relevant
to such defense and counterclaim, and identify all documents and evidence supporting such
alleged defenses and/or counterclaims.” (Emphasis added). This request is overbroad and
unduly burdensome on its face. It essentially asks Apple to provide a detailed exposition of all
evidence underlying its entire case—in addition to other information.
Directives regarding Conferral, Stipulations, and Other Matters
The parties shall continue to confer in a good faith effort to resolve without
further court intervention the issue raised by Valencell with respect to Apple’s source code
production. Apple shall by 21 April 2017 make the requested source code available to Valencell
or serve on Valencell an explanation as to why it contends it need not make the source code
available. The parties shall be prepared to fully address the status of this issue at the next
biweekly discovery status conference on 27 April 2017.
The parties’ stipulation extending until 21 April 2017 the deadline to serve
supplemental answers to various interrogatories is APPROVED, and the parties shall serve the
supplemental answers to these interrogatories by 21 April 2017.
The parties shall continue to confer in a good faith effort to resolve without
further court intervention the issue of Valencell’s identifying to Apple particular categories of
documents it has produced to Apple or withheld from production. Such identification need not
be on a request-by-request basis. The court believes that Valencell has (or should have) the
ability to provide identifying information of the sort sought and that provision of such
information would facilitate Apple’s review of the documents Valencell has produced and
ascertainment of outstanding areas of dispute. The parties shall be prepared to fully address the
status of this issue at the next biweekly discovery status conference on 27 April 2017.
Except as expressly modified in the instant Order, all deadlines and other terms in
the 3 April 2017 Order and the 27 March 2017 Order (D.E. 146), as modified by the 3 April
2017 Order, remain in effect, including in particular the requirements in paragraphs 8 to 10 of the
3 April 2017 Order and paragraph 1.h of the 27 March 2017 Order regarding collectively sameday service, rolling production, and conferral by telephone or in-person, which shall be deemed
applicable to the directives in the instant Order as if set forth herein.
The instant Order is not intended to address all directives announced at the 13
April 2017 discovery status conference. Directives not addressed herein remain in full force and
SO ORDERED, this 17th day of April 2017.
James E. Gates
United States Magistrate Judge
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