Pact XPP Technologies, AG v. Xilinx, Inc., et al

Filing 319

MEMORANDUM AND ORDER re Plaintiff Pact XPP Technologies, AG's Motion to Exclude Robert Munch. Signed by Magistrate Judge Roy S Payne on March 27, 2012. (jml)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
MARSHALL DIVISION
PACT XPP TECHNOLOGIES, AG
v.
XILINX, INC., et al.

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Case No. 2:07-CV-563-RSP

MEMORANDUM AND ORDER
Before the Court is Plaintiff PACT XPP Technologies, AG’s Motion to Exclude Robert
Münch. Dkt. No. 179. Also before the Court are Defendants’ response, Plaintiff=s reply, and
Defendants= sur-reply. Dkt. Nos. 203, 216 & 236. Having considered the briefing and all
relevant papers and pleadings, the Court finds that Plaintiff=s motion should be GRANTED AS
MODIFIED.
THE PARTIES= POSITIONS
Plaintiff alleges infringement of several patents related to field-programmable gate arrays
(AFPGAs@), which relate to a field of computer technology referred to as Areconfigurable processor
architecture.@ See Pl.=s Opening Claim Construction Brief, Dkt. No. 140 at 1. One of the named
inventors of the patents-in-suit, Robert Münch,1 is a former employee of Plaintiff and is a citizen
and resident of Germany. Dkt. No. 179 at 1. Plaintiff submits that in March 2010, Plaintiff
confirmed to Defendants that neither Plaintiff nor its counsel represent Mr. Münch. Id. at 2.
Plaintiff acknowledges it does not have proof of this in written correspondence and instead relies
on a declaration regarding Ainternal notes@ of a teleconference with Defendants= counsel. Id. at 2
& n.1; 5/26/2011 Enger Decl., Dkt. No.179 at Ex. 4. Because Defendants have purportedly
Arefused to answer@ Plaintiff=s interrogatory and inquiries as to whether Defendants have
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Mr. Münch=s last name is also sometimes spelled as AMuench.@
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communicated with Mr. Münch, Plaintiff believes that Defendants may Aambush [Plaintiff] at trial
with testimony from Mr. Münch.@

Dkt. No. 179 at 1 & 2-3.

Plaintiff also submits that

Mr. Münch likely engaged in confidential attorney-client communications with patent prosecution
counsel while employed by Plaintiff. Id. at 6-7.
Defendants respond that they only contacted Mr. Münch after learning at a Rule 30(b)(6)
deposition of Plaintiff that Mr. Münch did not want further contact with Plaintiff. Dkt. No. 203 at
1 & 6. Defendants argue that Plaintiff knew this much earlier but withheld the information and
thereby Afrustrated Defendants= efforts to contact Mr. Münch.@ Id. at 2. Defendants dispute that
Plaintiff confirmed to Defendants in March 2010 that Plaintiff was not representing Mr. Münch.
Id. at 5. Defendants represent they Ahave no record of this,@ and Defendants cite correspondence
to Plaintiff=s counsel on March 22, 2011, and April 4, 2011, that asked whether Plaintiff would
make Mr. Münch available for deposition. Id. at 5 n.2. Defendants urge that A[a]ll parties
recognize Mr. Münch=s relevance to this litigation@ because Plaintiff and Defendants listed Mr.
Münch on their respective initial disclosures. Id. at 6-7. Defendants also submit that their first
request for Plaintiff to produce Mr. Münch for deposition was by correspondence on January 26,
2010. Id. at 5. Defendants conclude that Plaintiff has no basis for excluding a relevant,
long-disclosed witness that Defendants could only first contact in April 2011 because of Plaintiff=s
failure to earlier confirm that it was not representing Mr. Münch. Id. at 8. Defendants urge that
A[Plaintiff=s] failure to depose Mr. Münch is the result of [Plaintiff=s] own litigation strategy to
suppress rather than seek testimony from this witness.@ Id. at 9.
Plaintiff replies that the March 2010 verbal communication must have occurred because,
for example: (1) Defendants demanded an answer regarding Mr. Münch by correspondence on
February 8, 2010, and Defendants were then silent about Mr. Münch for the next 14 months; and
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(2) Plaintiff demanded in August and October 2010 that Defendants disclose any of their
communications with Mr. Münch. Dkt. No. 216 at 3-4. Plaintiff also notes that even though
Defendants started communicating with Mr. Münch in April 2011, and discovery closed on
May 12, 2011, Defendants did not produce its communications with Mr. Münch until June 16,
2011. Id. at 3 & 4. Plaintiff requests exclusion of Mr. Münch or, alternatively, Aleave to take a
7-hour deposition of Mr. Münch outside the discovery period. In light of the time constraints and
Mr. Münch=s distance from Marshall[, Texas,] [Plaintiff] would agree to take his deposition while
Mr. Münch is in Marshall for trial.@ Id. at 5.
In sur-reply, Defendants reiterate that A(1) Mr. Münch is one of the two co-inventors named
on all asserted patents and (2) Mr. Münch has been on all parties= Rule 26(a)(1) initial disclosures
since day one.@ Dkt. No. 236 at 2. Finally, Defendants urge that Agiven that [Plaintiff] intends to
call the other named inventor (and [Plaintiff] executive) Martin Vorbach as a witness at trial, it
would be prejudicial to Defendants to exclude Mr. Münch from presenting his own testimony.@
Id.
DISCUSSION
Federal Rule of Civil Procedure (ARule@) 26 requires, in relevant part:
(e) Supplementing Disclosures and Responses.
(1) In General. A party who has made a disclosure under Rule 26(a)--or who has
responded to an interrogatory, request for production, or request for
admission--must supplement or correct its disclosure or response:
(A) in a timely manner if the party learns that in some material respect the
disclosure or response is incomplete or incorrect, and if the additional or corrective
information has not otherwise been made known to the other parties during the
discovery process or in writing; or
(B) as ordered by the court.
Plaintiff=s Interrogatory No. 1 to Defendants asked:
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Identify each communication You have had with any person or entity regarding
[Plaintiff], this litigation, and/or any of the Patents-in-Suit, with the exception of
persons You have retained as consulting or expert witnesses or counsel in this
litigation.
Dkt. No. 179, Ex. 5 at 5.
Defendants= counsel first contacted Mr. Münch on or about April 16, 2011, and talked to
him by telephone on April 22, 2011. 4/19/2011 E-mail from K. Schmitt to R. Muench, Dkt. No.
216 at Ex. 1 (AMr. Muench - I=m an attorney representing Xilinx, Inc. I wanted to see if you=d be
interested in a consulting project relating to a litigation Xilinx is involved with PACT XPP [sic].
Is there a good time to contact you?@); 6/2/2011 Letter from J. Taylor to J. Lahad, Dkt. No. 203,
Ex. L at 2; 6/16/2011 E-mail from J. Taylor to J. Lahad, Dkt. No. 203, Ex. M at 1. Discovery
closed on May 12, 2011. Dkt. No. 179 at 4. Defendants= counsel then met with Mr. Münch in
person on June 3-4, 2011, for about 12.5 hours total. Dkt. No. 203, Ex. M at 1; 6/9/2011 E-mail
from R. Münch, Dkt. No. 216, Ex. 2 at p. 45 of 45. According to Defendants, the April 22, 2011
phone conversation and the June 3-4, 2011 in-person meeting were the only substantive
conversations between Defendants= counsel and Mr. Münch as of the time of Defendants= response
brief on June 16, 2011. Dkt. No. 203, Ex. M at 1.
Defendants first notified Plaintiff of its contact with Mr. Münch on June 2, 2011, three
weeks after the close of discovery and over six weeks after Defendants first contacted Mr. Münch.
Dkt. No. 203, Ex. L at 2. Indeed, Mr. Münch even invoiced Defendants= counsel on May 3, 2011,
for consulting services provided during the April 22, 2011 phone conversation. 5/3/2011 E-mail
from C. Münch to K. Schmitt, Dkt. No. 216, Ex. 2 at pp. 24-25 of 45. Defendants did not provide
Plaintiff with this invoice or its other communications with Mr. Münch until June 16, 2011, over a
month after the close of discovery.
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As quoted above, Rule 26(e) sets forth a duty to supplement. In sum, Defendants were
actively forming a consulting relationship with Mr. Münch weeks before the close of discovery,
and Defendants= counsel had even been invoiced for Mr. Münch=s time. Plaintiff=s Interrogatory
No. 1 sought this type of information, as Plaintiff had reminded Defendants specifically as to Mr.
Münch. See 8/10/2010 & 10/14/2010 E-mails from J. Grinstein to R. Walsh, Dkt. No. 179, Ex. 8;
5/6/2011 E-mail from J. Lahad to J. Taylor, Dkt. No. 179, Ex. 12 at p. 3 of 5. Indeed, in a letter of
August 6, 2010, Defendants= counsel confirmed that A[i]f [Defendants] identify further
communications [responsive to Interrogatory No. 1], they will supplement this response as
required by Federal and Local Rules.@ 8/6/2010 Letter from R. Walsh to J. Grinstein, Dkt. No.
179, Ex. 7 at 1. In light of all of the foregoing circumstances, Defendants failed to supplement Ain
a timely manner.@ Fed. R. Civ. P. 26(e)(1)(A).
Rule 37(c)(1) sets forth the applicable analysis for the consequences of failure to comply
with the supplementation requirement of Rule 26(e):
(c) Failure to Disclose, to Supplement an Earlier Response, or to Admit.
(1) Failure to Disclose or Supplement. If a party fails to provide information or
identify a witness as required by Rule 26(a) or (e), the party is not allowed to use
that information or witness to supply evidence on a motion, at a hearing, or at a
trial, unless the failure was substantially justified or is harmless. . . . .
Fed. R. Civ. P 37.
In performing a Rule 37(c)(1) harmless error analysis . . ., this court looks to four
factors: (1) the importance of the evidence; (2) the prejudice to the opposing party
of including the evidence; (3) the possibility of curing such prejudice by granting a
continuance; and (4) the explanation for the party=s failure to disclose.
Primrose Operating Co. v. Nat=l Am. Ins. Co., 382 F.3d 546, 564 (5th Cir. 2004) (citation and
internal quotation marks omitted); see In re Sambrano, 440 B.R. 702, 706 (W.D. Tex. Bankr.
2010); cf. Roberts ex rel. Johnson v. Galen of Va., Inc., 325 F.3d 776, 782 (6th Cir. 2003) (A[Rule]
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37(c)(1) requires absolute compliance with Rule 26(a), that is, it mandates that a trial court punish
a party for discovery violations in connection with Rule 26 unless the violation was harmless or is
substantially justified. . . . We agree with the circuits that have put the burden on the potentially
sanctioned party to prove harmlessness. See . . . Heidtman v. County of El Paso, 171 F.3d 1038,
1040 (5th Cir.1999).@).
First, Mr. Münch=s testimony is likely important because he is one of two named
co-inventors of the patents-in-suit. Indeed, as Defendants note, all parties listed Mr. Münch on
their initial disclosures. See Pl.=s Initial Disclosures, served 10/7/2008, Dkt. No. 203, Ex. A at 2;
Defs.= Initial Disclosure Statement, served 10/7/2008, Dkt. No. 203, Ex. B at 4.
Second, the potential prejudice of allowing Mr. Münch to testify is substantial because
Plaintiff has not deposed Mr. Münch. On one hand, Plaintiff chose not to pursue a deposition of
Mr. Münch. Plaintiff=s reasons are not clear from the briefing but are not particularly relevant to
the present dispute. On the other hand, Plaintiff did not learn about Mr. Münch=s consulting
relationship with Defendants (discussed above) and listing as a potential trial witness for
Defendants until after the close of discovery. Defs.= Trial Witness List, served 6/6/2011, Dkt. No.
216, Ex. 4 at p. 4 of 7.
Third, as to explanation for Defendants= failure to timely supplement, Defendants= argue
that the late timing is Plaintiff=s own doing because Plaintiff failed to promptly confirm that it
would not be representing Mr. Münch. Plaintiff has submitted that it confirmed this back in
March 2010 during a telephone conference, as discussed above. Unfortunately, neither party has
produced any documentary evidence to conclusively resolve this dispute. Rather than attempt to
make a finding in this regard, the Court considers the uncertainty of these facts when balancing the
Rule 37(c)(1) factors. Telling, however, is that despite Plaintiff=s counsel=s renewed inquiries in
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early May 2011 as to whether Defendants had communicated with Mr. MünchCmere days after
Defendants= counsel had conferred with Mr. Münch by telephone on April 22, 2011, and had
received Mr. Münch=s invoice on May 3, 2011CDefendants did not disclose the fact of their
communication with Mr. Münch until June 2, 2011, and did not produce actual communications
until June 16, 2011. 5/3/2011 E-mail from C. Münch to K. Schmitt, Dkt. No. 216, Ex. 2 at pp.
24-25 of 45; 5/6/2011 E-mail from J. Lahad to J. Taylor, Dkt. No. 179, Ex. 12 at p. 3 of 5; 6/2/2011
Letter from J. Taylor to J. Lahad, Dkt. No. 203, Ex. L at 2; 6/16/2011 E-mail from J. Taylor to J.
Lahad, Dkt. No. 203, Ex. M at 1.
Fourth, the prejudice to Plaintiff can be mitigated by requiring Defendants to produce Mr.
Münch for deposition before trial. As noted above, Plaintiff has requested this alternative form of
relief if the Court denies Plaintiff=s request to exclude Mr. Münch. Dkt. No. 216 at 5.
On balance, the uncertainty about Plaintiff=s potential representation of Mr. Münch,
combined with the likely importance of Mr. Münch as one of only two named co-inventors,
justifies modifying the general principle set forth in Rule 37(c)(1) that untimely witnesses should
be excluded. Defendants= failure to timely supplement, however, warrants affording Plaintiff
some relief. Further, Mr. Münch=s consulting relationship with Defendants, as well as his invoice
to Defendants= counsel, demonstrate that Mr. Münch is now under Defendants= control.
Plaintiff=s motion is therefore hereby GRANTED AS MODIFIED: Defendants shall
produce Mr. Münch for deposition in the United States,2 at a place convenient for Plaintiff, no
later than May 13, 2012. If Defendants fail to do so, Mr. Münch will not be permitted to testify at

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The parties agree that any deposition in Germany would be subject to the requirements of the
AHague Convention,@ which are extensive and time-consuming. See Dkt. No. 179 at 2 & 6. The
Court assumes that insufficient time remains before trial to fulfill those requirements.
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trial. Defendants shall be responsible for Mr. Münch=s travel and lodging expenses for this
deposition. The deposition shall be limited to seven hours on the record.
SIGNED this 3rd day of January, 2012.
SIGNED this 27th day of March, 2012.

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ROY S. PAYNE
UNITED STATES MAGISTRATE JUDGE

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