Thorne Research et al v. Atlantic Pro-Nutrients

Filing 139

MEMORANDUM DECISION granting 73 Motion to Compeldenying 110 Motion ; denying 123 Motion for Leave to File. Signed by Magistrate Judge Paul M. Warner on 03/22/16. (jlw)

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH
CENTRAL DIVISION

THORNE RESEARCH, INC. and
SOFTGEL FORMULTORS, INC.,
Plaintiffs,

MEMORANDUM DECISION
AND ORDER
Case No. 2:13-cv-784

v.
District Judge Ted Stewart
ATLANTIC PRO-NUTRIENTS, INC.,
d/b/a/ XYMOGEN,

Magistrate Judge Paul M. Warner

Defendants.
District Judge Ted Stewart referred this case to Magistrate Judge Paul M. Warner
pursuant to 28 U.S.C. § 636(b)(1)(A).1 Before the court are the following motions: (1) Atlantic
Pro-Nutrients, Inc. d/b/a/ Xymogen’s (“Defendant”) motion to compel;2 (2) Thorne Research,
Inc. (“Thorne”) and Softgel Formulators, Inc.’s (“SFI”) (collectively, “Plaintiffs”) motion for
dedesignation of allegedly privileged documents;3 and (3) Defendant’s motion for leave to
amend or supplement invalidity contentions.4 The court has carefully reviewed the written
memoranda submitted by the parties. Pursuant to civil rule 7-1(f) of the Rules of Practice for the
United States District Court for the District of Utah, the court has concluded that oral argument is

1

See docket no. 35.

2

See docket no. 73.

3

See docket no. 110.

4

See docket no. 123.

not necessary and will determine the motions on the basis of the written memoranda. See
DUCivR 7-1(f).
BACKGROUND
SFI is the owner of United States Patent No. 8,491,888 (the “’888 Patent”) entitled
“Highly Absorbable Coenzyme Q10 Composition & Method of Producing Same.” Coenzyme
Q10 (“CoQ10”) is a natural material present in all living cells. In human cells, it is responsible
for electron transfer in the production of energy. Diet, genetics, aging, or medical conditions can
lower CoQ10 levels in the body and supplementation to restore CoQ10 to normal levels is touted
as having health benefits. The nutritional supplement at issue is a softgel containing a CoQ10
composition, which is more readily absorbable and usable by the body than prior CoQ10
supplements. Thorne sells nutritional supplements containing a crystal-free preparation of
coenzyme Q10 that has greater absorption rates than other comparable products on the market.
Thorne is the exclusive licensee of the ’888 Patent.
Plaintiffs filed suit against Defendant for patent infringement of the ’888 Patent.
Defendant filed a counterclaim seeking a declaratory judgment of non-infringement and
invalidity of the ’888 Patent.
1. Defendant’s Motion to Compel
Defendant moves for an order compelling Plaintiffs to provide a complete copy of the
Microsoft Access database that co-inventor Donald Steele utilized to input his formulas.
Specifically, Defendant seeks the metadata it alleges is contained in the Microsoft Access
database to independently determine the legitimacy of Plaintiffs’ claim that Mr. Steele and his
co-inventor were the first inventors of the ’888 Patent. A central issue in this case is the

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conception and reduction to practice of the claimed the ’888 Patent. Defendant disputes the date
of the claimed invention of the ’888 Patent. Defendant asserts that the date of invention is
relevant because a third party also conceived the claimed invention, and both he and the
inventors on the ’888 Patent filed their applications on the same day. Defendant also believes
that Plaintiffs tampered with the Microsoft Access database to create a false early conception
date.
In response, Plaintiffs argue that there is no information available in the Microsoft Access
database itself regarding whether and/or when any changes were made to any of the formulas
because this type of information does not exist. Plaintiffs explain that the Microsoft Access
database does not maintain metadata like word processing or spreadsheet programs do. In
addition, Plaintiffs state that the database is owned and maintained by a third party, Best
Formulations, which stores all of its and its customers’ formulations in the Microsoft Access
database, not just Plaintiffs’ formulations. Plaintiffs argue that ordering them to produce the
entire Microsoft Access database would also give Defendant access to Best Formulations’s
proprietary formulas as well as formulas provided by its customers that are proprietary to those
customers and highly confidential. Further, Plaintiffs contend, they have provided extensive
documentation and other evidence regarding the conception of the invention, including
information from the Microsoft Access database relevant to the formulas at issue. Plaintiffs also
assert that there is no evidence that either Plaintiffs or Best Formulations have improperly altered
or deleted any of the evidence relating to the formulas at issue.
In reply, Defendant argues that the testimony of the co-inventors is self-serving and that
the documentation provided by Plaintiff does not sufficiently corroborate their testimony.

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Defendant contends that it needs to independently verify the allegedly corroborating
documentation supporting Plaintiffs’ asserted invention dates through a forensic investigation of
the metadata in the Microsoft Access database. Defendant further asserts that the stipulated
protective order will safeguard third-party confidential information as Plaintiffs may provide the
electronic copy of the database under the designation of “CONFIDENTIAL INFORMATION -ATTORNEYS EYES ONLY.” And, lastly, Defendant argues that Plaintiffs have failed to
demonstrate that providing the database with the metadata intact would present an undue
hardship or expense.
Because the parties have competing affidavits regarding whether the Microsoft Access
database stores metadata, and evidence regarding the date of the invention is clearly relevant, the
court concludes that Defendant ought to be allowed the opportunity to conduct a forensic
analysis as to whether or not the metadata exists in its native format. While the court appreciates
Plaintiffs’ concerns regarding the disclosure of confidential and proprietary information, an
attorneys eyes only designation pursuant to the protective order should provide a sufficient
safeguard against disclosure of confidential or proprietary information. Accordingly,
Defendant’s motion to compel is GRANTED. Plaintiffs shall produce a copy of the Microsoft
Access database to Defendants within ten (10) days of the date of this order.
2. Plaintiffs’ Motion for Dedesignation of Allegedly Privileged Documents
Plaintiffs seek an order requiring Defendant to produce a document, Bates numbered
XYMOGEN_238-242, that was previously produced by Defendant containing the work of a
scientist employed by National Vitamin Company (“NVC”), a nonparty to this case. Defendant
raised attorney/client and work product claims of privilege with respect to the document during

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the Rule 30(b)(6) deposition of Defendant through its designated witness, Mike Mahoney.
Defendant then “clawed back” the document by letter dated July 17, 2015, pursuant to the
provisions of the Standard Protective Order. Defendant’s privilege log states “[d]ocument
prepared at the request of counsel.”5 Plaintiffs argue that the document at issue should not be
protected by the attorney/client or work product privileges because it was created by an
employee of Defendant’s third-party supplier, NVC; was neither copied nor directed to counsel;
does not incorporate or reference legal advice, impressions, or conclusions; and consists solely of
factual material, including the results of scientific experiments that apparently involved
formulating different CoQ10 compositions and observing their properties.
Defendant asserts that while it believes the ’888 Patent is invalid, at the beginning of this
litigation, its counsel investigated whether a design-around to create a non-infringing alternative
was feasible. Defendant states that counsel worked with Defendant and NVC (the supplier for
the accused infringing product) to determine the viability of compositions that would not fall
within the scope of the ’888 Patent’s claims. Defendant contends that the document at issue
reflects those efforts. Defendant argues that if counsel had conducted that research, rather than
its technical experts and supplier, those efforts would be considered privileged without question.
Defendant argues that the document was prepared by NVC at the direction of counsel for the
specific purpose of litigation to assist counsel in giving legal advice on design-around and noninfringing alternatives with respect to the ’888 Patent. Defendant asserts that privilege covers
communications between a client and a third-party, when, as here, those communications are
made in confidence and for the purpose of pending litigation.
5

Docket no. 110, Exhibit A.
5

Plaintiffs argue that Defendants have failed to demonstrate that the document is protected
by either the attorney/client or work product privileges. Specifically, the document at issue is
replete with factual material, including ingredients, percentages and the factual results of
scientific experiments. Plaintiffs contend that there has been no showing that NVC was ever
formally retained by Defendant or its counsel as an independent contractor or consultant or that it
was empowered to act on behalf of Defendant. Furthermore, Plaintiff asserts that Defendant has
expressly disavowed any such relationship in this case. Plaintiffs explain that Defendant resisted
efforts to obtain discovery regarding the products in suit on the basis that those products are
purchased by Defendant from NVC and that it has no relationship with NVC beyond that of
supplier/purchaser.
“The work product privilege protects against disclosure of the ‘mental impressions,
conclusions, opinions, or legal theories of a party’s attorney or other representative concerning
the litigation.’” Resolution Trust Corp. v. Dabney, 73 F.3d 262, 266 (10th Cir. 1995) (quoting
Fed. R. Civ. P. 26(b)(3)(B)). The doctrine was created to “‘shelter[] the mental processes of the
attorney, providing a privileged area within which he can analyze and prepare his client’s case.’”
United States v. Ary, 518 F.3d 775, 782 (quoting United States v. Nobles, 422 U.S. 225, 238
(1975)). The work-product privilege protects “documents and tangible things that are prepared
in anticipation of litigation or for trial by or for another party or its representative.” Fed. R. Civ.
P. 26(b)(3)(A). “Work product includes ‘[s]ubject matter that relates to the preparation, strategy,
and appraisal of the strengths and weaknesses of an action, or to the activities of the attorneys
involved, rather than to the underlying evidence.’” Adams v. Gateway, Inc., No. 2:02-CV-106
TS, 2003 WL 23787856, at *5 (D. Utah Dec. 30, 2003) (quoting In re Air Crash Disaster at

6

Sioux City, Iowa on July 19, 1989, 133 F.R.D. 515, 519 (N.D. Ill. 1990)) (alteration in original).
To be protected as work product, a document “must reflect the thinking of the attorney by
being an expression from her, or, if a communication to her, it must reflect back her inquiry.”
Adams v. Gateway, Inc., No. 2:01-CV-106 TS, 2003 WL 23787856, *10 (D. Utah Dec. 30,
2003). The document in question was prepared at Defendant’s request and at the direction of
Defendant’s counsel. Because the document was created in response to counsel’s inquiry and as
part of counsel’s strategy concerning the current litigation, the court concludes that the document
is protected by the work product privilege. As such, Plaintiff’s motion is DENIED.
3. Defendant’s Motion for Leave to Amend or Supplement Invalidity Contentions
Defendant seeks leave to amend or supplement its Preliminary Invalidity Contentions for
the ’888 Patent on the grounds that new evidence supporting invalidity obtained through
discovery, confirmed by the Court’s recent claim construction of the term “non-crystalline,” have
expanded the scope of Defendant’s defenses and counterclaims. Specifically, Defendant
contends that it did not have this information and did not understand its importance until after the
deadline for Final Unenforceability and Invalidity Contentions passed over one year ago, on
November 26, 2014. Defendant argues that the new theories of invalidity only came to light
during the depositions of Trevor Jones and Robin Koon in January and February, 2015. In
particular, Defendant asserts that Mr. Jones’s testimony corroborated Defendant’s theory that the
’888 Patent is likely invalid because the named inventors were not the first inventors of the
claimed subject matter of the ’888 Patent. Defendant also contends that Mr. Koon’s testimony
likewise suggested that a CoQ10 formulation that embodies at least some of the claims of the
’888 Patent was shipped to a third-party entity in the United States in 2002-2003 and that a

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crucial step in making a crystal-free CoQ10 product was known by Mr. Steele and Mr. Koon, but
that the pair made the deliberate decision to omit that information from the ’888 Patent
application, in violation of the best mode requirement.
Defendant also asserts that the theories of invalidity that it first identified in early 2015
depended on the Court’s construction of the term “non-crystalline” in October 2015. Under the
Court’s construction, “non-crystalline” means “no CoQ10 crystals are visible by light
microscope at magnifications of 640X”6 thus rendering the product shipped in 2002-2003
covered by the on-sale bar under 35 U.S.C. § 102(b). Defendant acknowledges that the Court’s
claim construction was not the claim construction Defendant proposed. Defendant asserts that
numerous district courts have granted leave to amend invalidity contentions when the court fails
to adopt the movant’s proposed construction. See, e.g., Celgene Corp. V. Natco Pharma Ltd.,
No. 10-5197(SDW)(SCM), 2015 WL 4138982, *3-*5 (D. N.J. July 9, 2015).
Plaintiffs assert that Defendant has failed to show good cause for amending the
scheduling order to allow Defendant to serve amended invalidity contentions. The court agrees.
The information upon which Defendant bases its motion has been known to Defendant since at
least January/February 2015. However, despite being fully aware of this information, Defendant
made no effort to seek to extend the already-expired deadline for service of Final Contentions.
While Defendant acknowledges that it obtained the evidence necessitating a change to its
invalidity contentions in early 2015, it argues that the significance of that evidence did not
become clear until the Court issued its claim construction order on October 8, 2015.
While Defendant contends that its delay in seeking leave to amend was due to its attempt
6

Docket no. 106 at 4.
8

to stipulate with Plaintiffs’ counsel, that does not excuse Defendant’s delay. The Local Patent
Rules are clear and provide:
A party may amend its Final Infringement Contentions; or Final Non-infringement, or
Unenforceability and Invalidity Contentions only by order of the court upon a showing of
good cause and absence of unfair prejudice to opposing parties, made no later than
fourteen (14) days of the discovery of the basis for the amendment. An example of a
circumstance that may support a finding of good cause, absent undue prejudice to the
non-moving party, includes a claim construction by the court different from that proposed
by the party seeking amendment.
LPR 3.4 (emphasis added). Defendant should have amended its Final Infringement Contentions
fourteen days after conducting the depositions of Mr. Jones and Mr. Koon, as that is when
Defendant discovered the basis for amendment and it acknowledges as such. But even assuming
that it needed the Court’s October 8, 2015 claim construction ruling before discovering the basis
for the amendment, Defendant failed to file the instant motion until December 31, 2015, eightyfour days after that order was issued. As the Federal Circuit Court of Appeals has recognized,
“[i]f the parties were not required to amend their contentions promptly after discovering new
information, the contentions requirement would be virtually meaningless.” O2 Micro Intern.
Ltd. v. Monolithic Power Sys., Inc., 467 F.3d 1355, 1366-67 (Fed. Cir. 2006).
Based on the foregoing, this court concludes that Defendant has failed to demonstrate
good cause for permitting it to amend its Final Infringement Contentions. As such, Defendant’s
motion is DENIED.
CONCLUSION
In summary, IT IS HEREBY ORDERED that
(1)
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Defendant’s motion to compel7 is GRANTED. Plaintiffs shall produce a copy of

See docket no. 73.
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the Microsoft Access database to Defendants within ten (10) days of the date of this order.
(2)

Plaintiffs’ motion for dedesignation of allegedly privileged documents8 is

DENIED.
(3)

Defendant’s motion for leave to amend or supplement invalidity contentions9 is

also DENIED.
IT IS SO ORDERED.
DATED this 22nd day of March, 2016.
BY THE COURT:

PAUL M. WARNER
United States Magistrate Judge

8

See docket no. 110.

9

See docket no. 123.
10