IPCom et.al. v. Apple Inc., No. 5:2014mc80037 - Document 17 (N.D. Cal. 2014)
Court Description: ORDER DENYING APPLE'S MOTION TO QUASH A SUBPOENA IN A CIVIL CASE by Judge Paul S. Grewal denying 7 Motion to Quash (psglc3S, COURT STAFF) (Filed on 7/28/2014)
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IPCom et.al. v. Apple Inc. Doc. 17 1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 9 NORTHERN DISTRICT OF CALIFORNIA 10 United States District Court For the Northern District of California 8 SAN JOSE DIVISION 11 IPCOM GMBH & CO. KG, 12 Plaintiff, 13 14 ) ) ) ) ) ) ) ) ) ) v. APPLE INC., 15 Defendant. 16 Case No. 5:14-mc-80037-EJD-PSG ORDER DENYING APPLE’S MOTION TO QUASH SUBPOENA IN A CIVIL CASE (Re: Docket No. 7) Before the court is Apple Inc.’s motion to quash IPCom GMBH & Co. KG’s subpoena for 17 18 Apple’s license agreements, which was served pursuant to 28 U.S.C. § 1782. 1 The matter was 19 submitted without oral argument pursuant to Civ. L.R. 7-1(b). Having reviewed the papers, the 20 court DENIES Apple’s motion to quash. 21 I. BACKGROUND 22 23 On March 2, 2012, IPCom filed an infringement action against Apple in Germany, asserting European patent EP 1 841 268. 2 On May 7, 2013, IPCom amended its complaint to include 24 25 26 1 See Docket No. 7. 2 See Docket No. 7-2 at 2-3. 27 28 1 Case No. 5:14-mc-80037-EJD-PSG ORDER DENYING APPLE’S MOTION TO QUASH SUBPOENA IN A CIVIL CASE Dockets.Justia.com 1 German patent DE 199 10 239. 3 IPCom alleges that the ’268 and ’239 patents are essential to the 2 3GPP UMTS wireless standard 4 and sought damages in excess of €1.5 billion. 5 The parties agree 3 that it is common in German patent litigation for plaintiffs to seek judgment only on infringement 4 and to defer judgment on damages to a second proceeding. 6 They also agree that IPCom’s decision 5 to seek judgment on both infringement and damages in the initial proceeding is not barred by 6 German procedural rules. 7 7 The parties engaged in extensive briefing on the patent infringement and damages issues 8 9 before the Mannheim Regional Court. 8 As part of that briefing, Apple represented that it entered United States District Court For the Northern District of California 10 into license agreements with other manufacturers covering a number of patents essential to UMTS 11 and GSM, GRPS and EDGE wireless standards. 9 On February 11, 2014, the court conducted an 12 oral hearing before a three-judge panel, which is the German equivalent of a trial. 10 The court 13 14 declined to hear evidence on damages, stating that it would first adjudicate the infringement claims. 11 On February 28, 2014, the court dismissed IPCom’s infringement claims, finding no 15 16 3 See Docket No. 7-6 at 2-3. 17 4 See Docket No. 2 at ¶ 5. 18 5 See Docket No. 7-5 at 3. 19 6 See Docket Nos. 7-1 at ¶ 9 and 10-1 at ¶ 4. 20 7 See id. 21 8 See Docket Nos. 7-1 at ¶ 10 and 10-1 at ¶ 5. 22 9 23 24 25 See Docket No. 10-1 at ¶ 6 (“On September 24, 2013, Apple alleged in its briefing for the first time that it has licensed about 75% of all patents declared as essential for the 2G and 3G standards from over 25 companies.”); see also Docket No. 1 at 3 (“A disputed issue in the 2 O 53/12 and 2 O 95/13 actions in Germany concerns Apple’s licenses for wireless communications technologies. In the pending German litigation, Apple claimed that it has allegedly concluded license agreements covering a number of patents that are declared essential to UMTS and GSM, GPRS, and EDGE.”). 10 26 11 27 28 See Docket No. 10-1 at ¶ 7; see also Docket No. 7 at 3. See Docket No. 7-1 at ¶ 11 and 12 (“The court clarified that if IPCom had eventually succeeded in establishing infringement, the court would have issued an interlocutory judgment only as to the infringement claim . . . which is subject to a separate appeal—and would address the amount of damages only after a finding of infringement has become final.”). 2 Case No. 5:14-mc-80037-EJD-PSG ORDER DENYING APPLE’S MOTION TO QUASH SUBPOENA IN A CIVIL CASE 1 infringement of the ’268 and ’239 patents. 12 Because it found no infringement, the district court 2 did not reach the damages issue. On March 6, 2014, IPCom filed a timely appeal with the Federal 3 Court of Justice of Germany in Karlsruhe. 13 “The entire case including the question of the amount 4 of damages owed is now before the Court of Appeals.” 14 5 6 7 8 9 On February 7, 2014, in preparation for the German trial, IPCom filed an ex parte application in this court pursuant to Section 1782 seeking leave to obtain copies of Apple’s license agreements for use in the German proceeding. 15 IPCom argued that “such license agreements are directly relevant to the damages calculation in that action.” 16 On April 10, 2014, IPCom complied United States District Court For the Northern District of California 10 with this court’s status request and filed a status update explaining that the suit was pending before 11 the German appeals court. 17 IPCom also advised that unlike American appellate courts, German 12 appellate courts may receive facts on appeal. 18 Finding that the discovery sought remained 13 14 warranted pursuant to Section 1782, the court granted IPCom leave to obtain copies of Apple’s license agreements, without prejudice to any motion to quash. 19 On May 5, 2013, Apple so 15 16 moved. 20 17 18 12 See Docket Nos. 7-7 and 7-8. 19 13 See Docket No. 10-1 at ¶ 9. 20 14 See id. at ¶ 10. 21 15 See Docket No. 1. 22 16 See id. at 3. 23 17 See Docket No. 3. 24 18 25 26 See Docket No. 3 at 1 (“Unlike appellate courts in the United States, German appellate courts may act as a fact-finder. As a result, the discovery sought by IPCom’s pending § 1782 application remains warranted and may be used and relied upon by the German appellate courts in their decisions, including in the calculation of damages.”) (citation omitted). 19 See Docket No. 5 at 5. 20 See Docket No. 7. 27 28 3 Case No. 5:14-mc-80037-EJD-PSG ORDER DENYING APPLE’S MOTION TO QUASH SUBPOENA IN A CIVIL CASE II. LEGAL STANDARDS 1 “Under 28 U.S.C. § 1782, a district court may order a person residing or found within its 2 3 district to produce documents or testimony for use in a foreign legal proceeding, unless the 4 disclosure would violate a legal privilege.” 21 A district court may issue such an order where: (1) the 5 6 7 8 discovery is sought from a person residing in the district to which the application is made; (2) the discovery is for use in a proceeding before a foreign tribunal; and (3) the applicant is a foreign or international tribunal or an “interested person.” 22 A district court has wide discretion to grant or deny a Section 1782 application. 23 The 9 United States District Court For the Northern District of California 10 Supreme Court has provided a “non-exhaustive” 24 list of factors that a court should consider: 11 (1) whether the “person from whom the discovery is sought is a participant in the foreign 12 proceeding”; (2) “the nature of the foreign tribunal, the character of the proceedings underway 13 abroad, and the receptivity of the foreign government or the court or agency abroad to U.S. federal- 14 court judicial assistance”; (3) whether the discovery request is an “attempt to circumvent proof15 16 17 gathering restrictions or other policies of a foreign country or the United States”; and (4) whether the discovery requested is “unduly intrusive or burdensome.” 25 It is common for parties to file ex parte applications, as “parties will be given adequate 18 19 notice of any discovery taken pursuant to the request and will then have the opportunity to move to 20 21 22 23 24 25 21 See In re Ex Parte Application of Apple Inc., Apple Retail Ger. GMBH, and Apple Sales Int’l, Case No. 3:12-mc-80013-JW, 2012 WL 1570043, at *1 (N.D. Cal. May 2, 2012) (citing 28 U.S.C. § 1782(a); Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 246-47 (2004)). 22 28 U.S.C. § 1782; see In re Republic of Ecuador, Case No. 3:10-mc-80225-CRB-EMC, 2010 WL 3702427, at *2 (N.D. Cal. Sep. 15, 2010). 23 See Intel Corp., 542 U.S. at 264. 24 In re Ex Parte Application of Apple Inc., 2012 WL 1570043, at *1. 26 27 25 28 Intel, 542 U.S. at 264-65; see also In re Ex Parte Application of Apple Inc., 2012 WL 1570043, at *1. 4 Case No. 5:14-mc-80037-EJD-PSG ORDER DENYING APPLE’S MOTION TO QUASH SUBPOENA IN A CIVIL CASE 1 2 quash the discovery or to participate in it.” 26 In a motion to quash a subpoena issued in civil litigation, however, the burden of persuasion is borne by the movant. 27 III. DISCUSSION 3 4 5 6 7 8 9 This court previously concluded that it had the legal authority to grant IPCom’s ex parte application to issue the subpoena to Apple. 28 The court noted that (1) Apple resides in this district, (2) the discovery would be of use in German litigation and (3) the application is brought by a party to that German litigation. 29 Apple does not contest that this court has the discretion to issue an order pursuant to Section 1782. 30 Apple instead argues that three discretionary factors weigh in United States District Court For the Northern District of California 10 favor of granting Apple’s motion to quash: (1) IPCom’s subpoena is untimely; (2) IPCom has no 11 current need for the requested discovery; and (3) IPCom may intend to use the license agreements 12 for improper purposes. 31 13 A. IPCom’s Subpoena Is Timely 14 Apple first argues that IPCom’s subpoena should be quashed as untimely given the 15 16 procedural posture of the German litigation. 32 It asserts that IPCom is inappropriately “seeking 17 18 26 19 27 20 21 22 In re Republic of Ecaudor, 2010 WL 3702427, at *2. See In re Ex Parte Application of Apple Inc., 2012 WL 1570043, at *1 (citing Green v. Baca, 226 F.R.D. 624 (C.D. Cal. 2005)); see also Heraeus Kulzer, GmbH v. Biomet, Inc., 633 F.3d 591, 597 (7th Cir. 2011) (“Once a section 1782 applicant demonstrates need for extensive discovery for aid in a foreign lawsuit, the burden shifts to the opposing litigant to demonstrate, by more than angry rhetoric, that allowing the discovery sought (or a truncated version of it) would disserve the statutory objectives.”). 28 See Docket No. 5. 29 See id. 30 See Docket No. 7. 23 24 25 31 26 27 See id. at 5-8 (“In sum, Apple asks that the Court quash the subpoena, given the merits judgment against IPCom in Germany; IPCom’s undue delay in seeking this discovery; and the unavailability of using § 1782 to obtain information for non-litigation purposes like license negotiations.”). 32 28 See id. at 5. 5 Case No. 5:14-mc-80037-EJD-PSG ORDER DENYING APPLE’S MOTION TO QUASH SUBPOENA IN A CIVIL CASE 1 discovery for use after trial has concluded.” 33 The Supreme Court has held that though the 2 proceeding for which discovery is sought under Section 1782 must be “within reasonable 3 contemplation,” it need not be “‘pending’ or ‘imminent.’” 34 While Apple is correct that the trial 4 before the German district court has concluded, the German proceeding remains pending before the 5 Court of Appeals. 35 IPCom’s subpoena thus meets and exceeds the Supreme Court’s standard for 6 timeliness. 7 Apple’s reliance on two Southern District of New York cases in which the court denied 8 9 Section 1782 applications as untimely is misplaced. 36 In Aventis Pharma v. Wyeth, the court United States District Court For the Northern District of California 10 denied Aventis’ application for two reasons. 37 First, the Aventis court noted that Aventis did not 11 seek production in French court despite the French court’s apparent jurisdictional reach over the 12 documents. 38 Here, although Apple does not expressly argue that IPCom could have sought 13 production in German court, the court notes that IPCom could not have done so as “a party in a 14 German lawsuit can only request specific documents from his adversary, not categories of 15 16 documents.” 39 Second, the Aventis court refused to allow Aventis to “rush to a U.S. Court on the eve of an 17 18 appeal in hopes of obtaining discovery it could have requested in this same Court” at the outset of 19 33 Docket No. 7 at 5. 34 Intel, 542 U.S. at 259. 35 See Docket No. 10-1 at ¶ 9 and 10. 36 See Docket No. 7 at 4-5. 20 21 22 23 37 24 See Aventis Pharma v. Wyeth, Case No. M-19-70, 2009 WL 3754191, at *1 (S.D.N.Y. Nov. 9, 2009). 25 38 26 39 27 28 See id. Docket No. 10-1 at ¶ 18; see also Docket No. 5 at 4 (granting IPCom’s ex parte Section 1782 application and noting that “the requested information therefore does not appear within the immediate reach of a German tribunal); Heraeus Kulzer, GmbH, 633 F.3d at 597 (“Heraeus cannot obtain even remotely comparable discovery by utilizing German procedures.”). 6 Case No. 5:14-mc-80037-EJD-PSG ORDER DENYING APPLE’S MOTION TO QUASH SUBPOENA IN A CIVIL CASE 1 the French litigation. 40 The court stated that “the timing of Aventis’ request” would create a “‘fire 2 drill’” that would place “a burden on Wyeth so great that they can not produce the requested 3 documents in time for the French appeal.” 41 Here, because “the appellate briefing will continue, 4 likely for many more months,” there is no reason to believe, and Apple does not even claim, 42 that 5 production for the appeal will be burdensome. 43 6 B. IPCom Has A Current Need for the Requested Discovery 7 As previously noted, IPCom made the unusual but permissable decision to seek judgment 8 9 on both infringement and damages before the German district court. 44 Therefore, although the United States District Court For the Northern District of California 10 district court did not reach the damages issue, “the entire case including the question of the amount 11 of damages owed is now before the Court of Appeals.” 45 IPCom has stated that because “the 12 license agreements sought are directly relevant to the damages calculation” in the action, 46 IPCom 13 “intends to submit the requested licenses to the appellate court.” 47 14 15 16 17 40 Id. 18 41 See id., at *2. 19 42 20 21 22 23 24 Docket No. 10-1 at ¶ 17. Apple agrees that it is “possible” that the appellate briefing in this case will continue for several months. Docket No. 14 at 3. Apple’s arguments regarding the status of the appeal in IPCom GmbH & Co. KG v. Nokia Corp are irrelevant to the timeliness issue, as that case has already been decided. See Docket No. 15. Moreover, the imminence of a different case has no bearing on Apple’s ability to produce discovery in this case. See Docket No. 14 at 3. 43 In re Application of Mare Shipping Inc. and Apostolos Mangouras, Case No. 13-Misc.-238, 2013 WL 5761104 (S.D.N.Y. Oct. 23, 2013), is likewise distinguishable. In that case, the court denied the applicants’ Section 1782 application because the Spanish court had jurisdictional reach over the discovery. See id., at *5. 44 See Docket Nos. 7-1 at ¶ 9 and 10-1 at ¶ 4. 45 See id. at ¶ 10. 46 See Docket No. 1 at 3. 47 Docket No. 10-1 at ¶ 11. 25 26 27 28 7 Case No. 5:14-mc-80037-EJD-PSG ORDER DENYING APPLE’S MOTION TO QUASH SUBPOENA IN A CIVIL CASE Apple counters that the appeals court is unlikely to address the damages issue, so IPCom 1 2 does not currently need the requested discovery. 48 Apple further argues that even in the unlikely 3 event that the appeals court reverses the finding of noninfringement, 49 it will likely remand the case 4 to the district court for consideration of damages. 50 Apple therefore contends that the odds that 5 IPCom will need the license agreements for the appellate proceeding are “vanishingly small.” 51 6 Yet Apple does not argue that there is no chance that the appeals court will reverse and consider 7 8 9 damages, only that such an outcome is highly unlikely. It cites no authority for the proposition that this court should deny IPCom access to discovery that may, even with low probability, be relevant United States District Court For the Northern District of California 10 to the appellate proceeding. 52 Moreover, Apple’s argument that “at a minimum,” the court should 11 quash IPCom’s subpoena without prejudice “to allow IPCom to refile later if it prevails in its 12 appeal of the patent merits,” is without basis. 53 Apple provides no rationale for delaying 13 14 production of the license agreements nor any evidence or argument that the burden will change at all over time. 54 15 16 17 48 18 49 19 20 21 See Docket No. 7 at 6-7. Apple filed a notice of supplemental authority in support of its motion to quash informing the court of the Karlsruhe Court of Appeals’ holding in the parallel litigation between IPCom and Nokia. “The Court of Appeal held that the EP 268 patent was not essential to the cellular standard specification that IPCom had cited in support of its infringement allegations, and Nokia had not infringed.” Docket No. 15 at 2. Apple argues that this decision “should presage defeat for IPCom” in its appeal against Apple. Id. 50 22 Apple admits that “German appellate courts do have some discretion to determine damages.” Docket No. 7 at 6. 23 51 24 52 25 26 Docket No. 14 at 4. Apple also argues that even if the German appeals court addresses the damages issue, IPCom has failed to show that the license agreements are relevant to the damages issue. See Docket 14 at 3. However, this court has already held that “IPCom targets Apple’s relevant, standards-essential license agreements related to wireless communications technology.” Docket No. 5 at 5. 53 Docket No. 14 at 4. 54 See id. 27 28 8 Case No. 5:14-mc-80037-EJD-PSG ORDER DENYING APPLE’S MOTION TO QUASH SUBPOENA IN A CIVIL CASE 1 C. IPCom Does Not Intend to Use the Requested Discovery for an Improper Purpose Apple finally argues that IPCom’s subpoena should be quashed “to the extent that IPCom 2 3 seeks to use the discovery for an improper purpose.” 55 IPCom represents that it does not intend to 4 use the license agreements for any purpose outside the ambit of Section 1782, 56 and Apple 5 provides no reason to discredit IPCom’s representation. 57 6 In sum, production of the license agreements is warranted pursuant to Section 1782. Apple 7 8 9 shall produce the agreements to IPCom by August 27, 2014. D. Apple also requests that, in the event that this motion is denied, the license agreements be 10 United States District Court For the Northern District of California A Protective Order is Warranted 11 subject to a protective order limiting access to IPCom’s outside counsel that do not have any 12 financial interest in IPCom and that do not represent IPCom in licensing negotiations. 58 Apple’s 13 request is reasonable, and in any event, IPCom has agreed to such a protective order. 59 The parties 14 shall submit a proposed protective order by August 13, 2014. 15 16 17 IT IS SO ORDERED. Dated: July 28, 2014 _________________________________ PAUL S. GREWAL United States Magistrate Judge 18 19 20 21 22 23 55 24 Docket No. 7 at 7. 56 25 See Docket No. 10-1 at ¶ 11 (“IPCom intends to submit the license agreements that it has subpoenaed from Apple to the Court of Appeals for use in the appellate proceeding.”). 26 57 See Docket No. 7 at 7. 27 58 See id. 28 59 See Docket No. 10 at 6. 9 Case No. 5:14-mc-80037-EJD-PSG ORDER DENYING APPLE’S MOTION TO QUASH SUBPOENA IN A CIVIL CASE
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