Zest IP Holdings, LLC et al v. Implant Direct MFG. LLC et al, No. 3:2010cv00541 - Document 285 (S.D. Cal. 2013)
Court Description: ORDER Granting Defendants' Request to Conduct Discovery. Signed by Magistrate Judge William V. Gallo on 9/13/2013.(srm)
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Zest IP Holdings, LLC et al v. Implant Direct MFG. LLC et al Doc. 285 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 ZEST IP HOLDINGS, LLC, et al., 12 Plaintiffs, 13 v. 14 IMPLANT DIRECT MFG., et al., Defendants. 15 16 ) ) ) ) ) ) ) ) ) ) ) Civil No.10-0541-GPC(WVG) ORDER GRANTING DEFENDANTS’ REQUEST TO CONDUCT DISCOVERY 17 18 On August 19, 2013, the Court received a letter from 19 Defendants’ counsel in which Defendants seek the Court’s 20 permission to take discovery from Plaintiffs and third 21 parties Avista Capital Partners (“Avista”) and The Jordan 22 Company 23 received 24 Defendants’ request. (“Jordan”). a letter On from September 4, Plaintiffs’ 2013, counsel Plaintiff opposing 25 26 27 28 1 10cv0541 Dockets.Justia.com 1 Prior to August 16, 2013, Plaintiff was owned by 2 Jordan. On August 16, 2013, Avista acquired Plaintiff from 3 Jordan.1/ Defendants seek permission “to take discovery about 4 5 the agreement 6 evaluation of (Plaintiff’s) claims and the ‘219 and ‘447 7 Patents, as well as any information that may have been 8 exchanged between Plaintiff, (Jordan) and Avista concern- 9 ing this between lawsuit, Implant the Direct (Jordan) ‘219 or Sybron and ‘447 Avista, Avista’s Patents, Implant International, Implant 10 Direct, 11 Direct Sybron Manufacturing and Dr. Gerald Niznick, prior 12 to the (acquisition) of (Plaintiff) by Avista.” (Defen- 13 dants’ August 19, 2013 letter at 1). 14 Defendants argue that the information they seek is 15 relevant to the issues of damages in this case and the 16 value of a reasonable royalty for Plaintiff’s patents. 17 Further, Defendants argue that the information it seeks is 18 reasonably calculated to lead to the discovery of admissi- 19 ble evidence. Specifically, Defendants assert that their 20 expert witness on the subject of damages, who has already 21 issued a report pursuant to Fed. R. Civ. P. 26(a)(2)(B), 22 has opined that the information Defendants seek could have 23 a direct effect on her opinion regarding the value of a 24 reasonable royalty for Plaintiff’s patents, and the amount 25 of patent and trademark damages that Plaintiff might be 26 able to claim. 27 28 1/ On September 11, 2013, at the Court’s request, Plaintiffs’ counsel confirmed the acquisition date. 2 10cv0541 1 Additionally, Defendants contend that Plaintiff’s 2 expert witness on the subject of damages, who has also 3 issued a report pursuant to Fed. R. Civ. P. 26(a)(2)(B), 4 has analyzed the factors generally used to determine the 5 value of a reasonable royalty for Plaintiff’s patents. 6 Defendants acknowledge that the transaction between 7 Avista and Jordan is not definitively controlling as to 8 the value of a reasonable royalty. However, they believe 9 that information exchanged between Plaintiff, Jordan, and 10 Avista has some relevance to each expert witness’ report 11 and conclusions. Defendants also acknowledge that, at this 12 time, discovery has been closed for them. 13 Plaintiffs argue that Defendants’ request to reopen 14 discovery for them so that they can pursue overly broad 15 discovery requests is unjustified. Plaintiffs contend that 16 Defendants’ requests will go far beyond the value of a 17 reasonable 18 belatedly cover areas of discovery that should have been 19 previously completed. Further, Plaintiffs contend that 20 they will be prejudiced by allowing Defendants to conduct 21 the 22 significantly delay this action and increase their costs. 23 Moreover, Plaintiffs inform the Court that Avista and 24 Jordan are not within the jurisdiction of this Court. 25 Therefore, Defendants will have to serve subpoenas on 26 Avista and Jordan issued by another Court. royalty requested for discovery Plaintiff’s because patents, such and discovery may will 27 28 3 10cv0541 1 Fed. R. Civ. P. 16(b)(4) states that a court’s 2 scheduling order may be modified for good cause and with 3 the judge’s consent. The court has discretion whether to 4 reopen discovery or to hold the parties to discovery cut- 5 off dates. Cardenas v. Whittemore, 2013 WL 244374 (S.D. 6 Cal. 2013), citing Cornwell v. Electra Central Credit 7 Union, 439 F.3d 1018, 1027 (9th Cir. 2006). 8 Here, the Court finds good cause to allow Defendants 9 to reopen discovery for them. Some of the information 10 sought by Defendants is relevant to the issues of damages 11 in this action and may affect the opinions of Plaintiffs’ 12 and Defendants’ expert witnesses on damages. Further, that 13 Plaintiff was sold to Avista on August 16, 2013 is a new 14 and 15 Plaintiffs) could not have anticipated. Since discovery 16 has been closed for Defendants for some time, it would 17 have been impossible for Defendants to have previously 18 sought to obtain the information it now seeks. recent development that Defendants (and perhaps 19 Plaintiffs’ arguments regarding the prejudice they 20 will suffer are unavailing. Despite Plaintiffs’ allega- 21 tions that Defendants’ request to seek discovery from 22 Avista and Jordan will delay the case, the last date 23 scheduled by the District Judge assigned to this case for 24 a hearing on a motion is January 3, 2014. Therefore, this 25 case will be delayed at least until that time, if not 26 longer. Additionally, with regard to Plaintiffs’ claim 27 that they will incur more costs as a result of Defendants’ 28 requests for information regarding Avista’s acquisition of 4 10cv0541 1 Plaintiff, the Court believes that the costs to Plaintiff 2 will be minimal in relation to the costs that Jordan and 3 Avista may have to incur. 4 However, the Court agrees with Plaintiffs that, as 5 stated in Defendants’ August 19, 2013 letter, Defendants’ 6 requests 7 generally stated and not fully delineated. Therefore, the 8 Court ORDERS as follows: 1. 9 are over broad. Defendants’ Moreover, Request To the Reopen requests are Discovery is 10 GRANTED only for the limited purpose of seeking discovery 11 from Plaintiff, Jordan, and Avista regarding: 12 a. Jordan’s and Avista’s valuation of Plain- 13 tiff’s ‘219 and ‘447 Patents and the damages recoverable 14 in this action; 15 b. information exchanged between Plaintiffs, 16 Jordan, and Avista concerning this lawsuit, and the ‘219 17 and ‘447 Patents, prior to Avista’s acquisition of Plain- 18 tiffs. 19 2. Defendants shall not be permitted to obtain: 20 a. the acquisition agreement between Jordan and 21 Avista, unless and until they show that the acquisition 22 agreement is relevant to a claim or defense in this 23 action; 24 b. general information exchanged between 25 Plaintiffs, Jordan, and Avista regarding Defendants and 26 Dr. Niznick, unless and until they show that such informa- 27 tion is relevant to a claim or defense in this action; 28 5 10cv0541 1 c. “any information that may have been exchanged 2 between Plaintiffs, Jordan and Avista” other than the 3 information specified in number 1 above. 3. To avoid unnecessary delay, on or before 4 5 October 4, 2013, Defendants shall serve subpoenas on 6 Jordan and Avista. 7 DATED: September 13, 2013 8 9 Hon. William V. Gallo U.S. Magistrate Judge 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6 10cv0541
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