Ethox Chemical LLC et al v. Coca-Cola Company, The

Filing 158

OPINION AND ORDER granting in part as set out Ethox's 93 motion to compel. Discovery shall proceed as outlined in this order. Signed by Honorable Timothy M Cain on 6/16/2014. (gpre, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
GREENVILLE DIVISION
Ethox Chemical, LLC; James Tanner,

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Plaintiffs,
v.
The Coca-Cola Company,
Defendant.

Case No. 6:12-cv-01682-TMC
OPINION & ORDER

I. BACKGROUND
Before the events giving rise to the current suit, The Coca-Cola Company (“Coca-Cola”)
developed a genus of molecules it calls Formula II, which it hoped would lead to the
development of a molecule that would provide greater barrier resistance for plastic bottles,
thereby increasing the shelf life of bottled products. In February 2009, Coca-Cola approached
Ethox Chemical, LLC (“Ethox”), to assist with the development and assessment of these
molecules. Ethox agreed to assist and James Tanner (“Tanner”)1, an Ethox chemist, offered
PEM.

Coca-Cola later filed two utility patent applications, which included PEM, without

informing Ethox or listing Tanner as a co-inventor.2 As a result, Ethox and Tanner filed this
action, seeking to have Tanner named as a co-inventor on the patent and to hold Coca-Cola
responsible for misappropriating PEM.
In January 2013, the court dismissed Ethox’s South Carolina Unfair Trade Practices Act
and misappropriation claims with prejudice, dismissed its fraud, negligent representation, and
misappropriation of trade secret claims without prejudice, and granted Ethox leave to file a

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  Because Tanner has assigned all of his rights to Ethox, the court refers to Tanner and Ethox, collectively, as
“Ethox” in parts of this order. 
2
Central to this dispute is U.S. Patent No. 8,110,265 (“the ’265 patent”).

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motion to amend the complaint. (ECF No. 43.) Ethox expressly chose not to amend at that time.
(ECF No. 45.) Thus, the only remaining claims are for (1) correction of ownership of patent
pursuant to 35 U.S.C. § 256; (2) unjust enrichment; and (3) imposition of constructive trust.
In June 2013, the court heard extensive argument on the parties’ motions for protective
orders.

The court adopted the proposed confidentiality order, including an agreed upon

prosecution bar. Since our last hearing, it appears that the parties have been actively engaging in
discovery.
On May 28, 2014, counsel gathered and the court heard oral argument on Ethox’s motion
to compel (ECF No. 93). Also pending before the court at that time were (1) Coca-Cola’s
motion for summary judgment (ECF No. 97); (2) Coca-Cola’s motion to strike jury trial demand
(ECF No. 98); and (3) Ethox’s motion to amend the complaint (ECF No. 99). However, because
the court determined after oral argument on the motion to compel that Ethox is entitled to
additional discovery, it found the other three motions premature and denied them without
prejudice and with leave to re-file when the parties complete discovery. (See ECF No. 155.)
Accordingly, this order only addresses the motion to compel.
II. LEGAL STANDARD
The court reviews procedural matters not unique to patent law, such as a motion to
compel, under the law of the regional circuit. See Haworth, Inc. v. Herman Miller, Inc., 998
F.2d 975, 977 (Fed. Cir. 1993). In the Fourth Circuit, the trial court has broad discretion to grant
or deny a motion to compel discovery. See Lone Star Steakhouse & Saloon, Inc. v. Alpha of Va.,
Inc., 43 F.3d 922, 929 (4th Cir. 1995).

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III. DISCUSSION
1. Depositions
Ethox has conducted three Rule 30(b)(6) depositions, but asserts that none of the
designated witnesses were prepared to provide the requested information on certain topics.
Specifically, Ethox challenges the witnesses’ testimony on Topics 10-15, regarding the
contribution of each of the named inventors to the ‘265 patent and related patent applications,
and Topics 5, 8, and 20, regarding Coca-Cola’s work on compounds falling within Formula II,
including its business dealings with third parties. Accordingly, Ethox has moved the court to
order Coca-Cola to produce witnesses adequately prepared to testify as to the 30(b)(6) topics. In
addition, Ethox requests that the court order Coca-Cola to pay costs and fees associated with
having to re-conduct the depositions. In response, Coca-Cola argues that, in lieu of specifically
preparing witnesses to testify on the 30(b)(6) topics, it produced the three people with the most
personal knowledge of the events at the heart of this lawsuit – the other named inventors on the
‘265 patent.3
Federal Rule of Civil Procedure 30(b)(6) requires a corporation to respond to a deposition
notice by designating and producing someone familiar with the topics listed in the notice. Fed.
R. Civ. P. 30(b)(6); see Reilly v. Natwest Markets Group Inc., 181 F.3d 253, 268 (2d Cir. 1999).
The designated witness testifies on the corporation’s behalf and, thus, testifies not only on his
personal knowledge of a subject, but on corporate knowledge. See Brazos River Authority v. GE
Ionics, Inc., 469 F.3d 416 (5th Cir. 2006). It follows that, in order to comply with the rule, the

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Coca-Cola also argues that the court should dismiss Ethox’s motion to compel as untimely under Local Civil Rule
37.01, DSC. Rule 37.01 requires a party to file a motion to compel “within twenty-one (21) days after the receipt of
the discovery response to which the motion to compel is directed.” The district court has discretion to consider an
untimely motion to compel if the movant “offer[s] an acceptable explanation for [the motion’s] tardiness.” Spencer
Med. Assoc. v. Comm’r, 155 F.3d 268, 273 (4th Cir. 1998). Here, there is some debate regarding when the relevant
discovery substantially concluded. In the interest of deciding this case on the full merits, the court declines to
dismiss this motion on a possible procedural error.

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corporation has an affirmative duty to ensure that its designee has knowledge of all information
on the noticed topics reasonably available to the corporation and is prepared to provide complete,
binding answers on that information. See Bd. of Trustees of Leland Stanford Jr. University v.
Tyco Intern. Ltd., 253 F.R.D. 524 (C.D. Cal. 2008) (Rule 30(b)(6) implicitly requires a corporate
designee to review all matters known or reasonably available to the corporation in preparation
for the deposition, even if the documents are voluminous and reviewing them would be
burdensome); State Farm Mut. Auto Ins. Co. v. New Horizont, Inc., 250 F.R.D. 203 (E.D. Pa.
2008) (As a corollary to the corporation’s duty to designate a deposition witness, it must prepare
its designee to be able to give binding answers on its behalf, and perform a reasonable inquiry for
information that is noticed and reasonably available to it); Wilson v. Lakner, 228 F.R.D. 524 (D.
Md. 2005) (Corporation’s designated deponent is required to make good faith effort to find out
relevant facts).
After a full review of the deposition transcripts, it is clear to the court that Coca-Cola did
not adequately prepare its 30(b)(6) designees. The designated co-inventors did not consult with
each other or other Coca-Cola employees or representatives regarding the deposition topics or
review any associated notes or written materials. In several instances, the designees were not
able to testify as to their own personal involvement, let alone institutional knowledge of a topic,
due to lack of preparation. Accordingly, Ethox’s motion is GRANTED as to its request for
additional 30(b)(6) depositions and Coca-Cola is ordered to produce witnesses sufficiently
prepared to answer questions related to Topics 5, 8, 10-15, and 20.4

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Ethox has also requested reimbursement from Coca-Cola of any costs and fees associated with re-conducting the
depositions. In order to grant this request, the court would first have to make a finding that an award of fees and
costs is appropriate, then determine if the requested amount is reasonable through the application of factors adopted
in Barber v. Kimbrell’s, Inc., 577 F.2d 216 (4th Cir. 1978) and analysis of the lodestar formula. In this instance,
discovery has not been completed, so the court is unable to conduct this analysis on the record before it.
Accordingly, Ethox’s request for fees and costs is denied without prejudice.

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2. Documents
Ethox also moves the court to order Coca-Cola to produce several documents that CocaCola has withheld as privileged. Specifically, Ethox requests:
(1) Four draft patent applications, identified as:
a. CCCO_ETHOX_00007139,
b. CCCO_ETHOX_00007204,
c. CCCO_ETHOX_00006579, and
d. CCCO_ETHOX_00006650;
(2) Unredacted versions of two copies of a monthly project update:
a. CCCO_ETHOX_00001607 and
b. CCCO_ETHOX_00001609; and
(3) An unredacted version of a draft memorandum by Robert Kriegel:
a. CCCO_ETHOX_00001806.
At the hearing, the parties represented to the court that they could reach an agreement regarding
the production of these documents. On June 10, 2014, the court received a joint proposal from
the parties, which the court filed as an order on June 12, 2014. (ECF No. 157.) Pursuant to that
order and by consent of the parties,
(1)

Coca-Cola agrees to make unredacted copies of the documents available for review
and use by Ethox, including at deposition, in papers filed with the Court, in expert
reports, and as part of Ethox’s affirmative and defensive presentations at trial; and

(2)

Ethox agrees that the production of such documents and the elicitation of testimony
concerning such documents, as well as the subsequent use of such documents by
Ethox shall not be deemed a waiver of any attorney-client, work product, or any other

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applicable privilege that Coca-Cola has in the documents or the subject matter of the
documents.
IV. CONCLUSION
For the reasons stated above, Ethox’s motion to compel (ECF No. 93) in granted in part.
Discovery shall proceed as outlined in this order.
IT IS SO ORDERED.
s/Timothy M. Cain
United States District Judge
June 16, 2014
Anderson, South Carolina

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