HTC Corporation et al v. Technology Properties Limited et al, No. 5:2008cv00882 - Document 271 (N.D. Cal. 2011)

Court Description: ORDER DENYING 235 Defendants' Motion to Modify the Protective Order. Signed by Magistrate Judge Howard R. Lloyd on 3/1/2011. (hrllc1, COURT STAFF) (Filed on 3/1/2011)
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HTC Corporation et al v. Technology Properties Limited et al Doc. 271 1 ** E-filed March 1, 2011 ** 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 9 FOR THE NORTHERN DISTRICT OF CALIFORNIA 10 For the Northern District of California NOT FOR CITATION 8 United States District Court 7 SAN JOSE DIVISION 11 HTC CORP., et al., Plaintiffs, 12 ORDER DENYING DEFENDANTS’ MOTION TO MODIFY THE PROTECTIVE ORDER v. 13 14 No. C08-00882 JF (HRL) TECHNOLOGY PROPERTIES LIMITED, et al., [Re: Docket No. 235] 15 16 Defendants. ____________________________________/ 17 BACKGROUND 18 In February 2008, plaintiffs HTC Corporation and HTC America, Inc. (collectively, “HTC”) 19 filed this declaratory judgment action against defendants Technology Properties Ltd. (“TPL”), 20 Patriot Scientific Corp. (“Patriot Scientific”), and Alliacense Ltd. (“Alliacense”) (collectively, 21 “Defendants”), alleging that certain of TPL’s patents were not infringed and are invalid. Defendants 22 filed counterclaims, alleging that certain of HTC’s cellular phone products infringe TPL’s patents.1 23 24 The parties entered into a two-tiered protective order (Docket No. 161), which is substantially identical to the protective order in a related case, Acer Inc. et al. v. Technology 25 26 27 28 1 The four patents currently at issue are Nos. 5,809,336 (the “’336 Patent”); 5,440,749 (the “’749 Patent”); 6,598,148 (the “’148 Patent”); and 5,530,890 (the “’890 Patent”). 1 Properties Limited et al., No. 5:08-cv-877 (N.D. Cal.).2 Under the protective order as it now stands, 2 TPL’s and Alliacense’s in-house personnel are prohibited from viewing documents designated as 3 “Highly Confidential - Attorneys’ Eyes Only.” Docket No. 161 at ¶ 7.3. According to TPL and Alliacense, HTC has produced 1,838 pages of highly technical data 4 microprocessors contained in HTC’s products accused of infringement in this case, all of which 7 have been designated as “Highly Confidential - Attorneys’ Eyes Only” (the “Attorneys’ Eyes Only 8 Chip Technical Documents”).3 Many of these documents were provided to HTC by its third party 9 microprocessor providers, who consented to their production based on their being designated as 10 For the Northern District of California sheets, programmer guides, specifications, design manuals, and white papers regarding the 6 United States District Court 5 such. Docket No. 248 (“Chen Decl.”) ¶ 4. TPL and Alliacense now seek to amend the protective 11 order in this case to allow Douglas Lum, Alliacense’s Manager of Reverse Engineering and 12 Analysis, to review the Attorneys’ Eyes Only Chip Technical Documents for the purpose of 13 developing their infringement proof. Docket No. 235 (“Motion”) at 2. HTC opposes the motion 14 (Docket No. 249 (“Opp’n”)), and oral argument was heard on March 1, 2011. LEGAL STANDARD 15 16 The Ninth Circuit has established a balancing test to use when a party seeks discovery of an 17 opposing party’s trade secrets. The test compares “the risk of inadvertent disclosure of trade secrets 18 to a competitor, against the risk . . . that protection of . . . trade secrets impair[s] prosecution [of the 19 2 20 21 22 23 24 25 26 27 28 Acer and HTC filed declaratory judgment actions in this district seeking to establish that they do not infringe any valid and enforceable claim of four patents allegedly owned or controlled by TPL. See Acer Inc. et al. v. Technology Properties Limited et al., No. 5:08-cv-877 (N.D. Cal.); HTC Corp. et al. v. Technology Properties Limited et al., No. 5:08-cv-00882 (N.D. Cal.). Both of these suits named TPL and Alliacense as defendants. By order dated December 8, 2008, Judge Fogel declared the actions to be related. 3 The Bates numbers of the Chip Technical Documents are as follows: HTCTP0008372-426; HTCTP0008485-497; HTCTP0010922; HTCTP0011076-116; HTCTP0013693-708; HTCTP0044132-161; HTCTP0044359-373; HTCTP0045190-324; HTCTP0045712-724; HTCTP0075349-386; HTCTP0075742-792; HTCTP0076429-462; HTCTP0087329-366; HTCTP0087404-437; HTCTP0087877-903; HTCTP0125772-809; HTCTP0126354AA 354AU; HTCTP0148033-247; HTCTP0148397-453; HTCTP0148591-608; HTCTP0148725-901; HTCTP0155233-260; HTCTP0175966-6658; and HTCTP0179490-539. Docket No. 252 (“Joesten Decl.”) ¶ 2. 2 1 discovering party’s] claims.” Brown Bag Software v. Symantec Corp., 960 F.2d 1465, 1470 (9th 2 Cir. 1992). 3 4 5 DISCUSSION A. TPL and Alliacense’s Need for Lum to Review the Documents TPL and Alliacense argue that Lum is uniquely qualified to review the Attorneys’ Eyes Only 6 Chip Technical Documents. Motion at 4, 7-9. In support of this claim, Lum declares that his 7 “primary responsibility within Alliacense is to analyze third party products for the purpose of 8 determining whether they may infringe . . . the patents-in-suit in this litigation.” Lum Decl. ¶ 3. In 9 connection with this work, “[he] regularly review[s] technical manuals and specifications, and [he For the Northern District of California United States District Court 10 has] prepared thousands of claim charts evaluating hundreds of product, including the HTC products 11 accused of infringement in this case.” Id. Thus, he is “intimately familiar with the patented 12 technology” and has “specialized technical knowledge and expertise, based on [his] years of 13 experience assessing infringement of the patents-in-suit and [his] familiarity with the accused 14 products, that uniquely qualifies [him] to assist with the technical analysis in this case.” Id. ¶ 4. 15 In addition, TPL and Alliacense claim that “[w]ithout Mr. Lum’s assistance, [they] will need 16 to retain an expert to learn the more than 6,000 pages of file wrapper histories on the four patents in 17 suit (themselves the subject of more than 15 requests for reexamination) and to become intimately 18 familiar with HTC’s accused products.” Opp’n at 7. Based on the declaration of Mac Leckrone, 19 President and CEO of Alliacense, TPL and Alliacense argue that no independent expert could match 20 Lum’s level of expertise without a full year of study and preparation” because the size of the file 21 histories of the four patents-in-suit and there are more than 1,000 pieces of prior art. Motion at 9 22 (citing Leckrone Decl. ¶ 4. (“Alliacense expects that new engineers joining company team require at 23 least one full year to acquire deep understanding the MMP Portfolio, the claims, and the file 24 history.”)). Thus, “[f]or an expert not already intimately familiar with the patents and the accused 25 products, analyzing HTC’s [Attorneys’ Eyes Only] Chip Technical Documents and comparing them 26 to the relevant asserted claims is a Herculean task.” Id. 27 28 While Lum may be qualified to do the work that Defendants’ want to be done, the Court is somewhat skeptical of TPL and Alliacense’s claim that it would be extremely hard for them to find 3 1 an acceptable outside expert for this task. Leckrone’s declaration explains that it would take an 2 expert a full year to match Lum’s experience, but this is not the point. Rather, the point is whether 3 TPL and Alliacense’s action would be impaired if Lum, as opposed to an outside expert, is not 4 allowed to review the Attorneys’ Eyes Only Chip Technical Documents. Leckrone’s declaration 5 does not address this. Oklobdzija, who has been providing assistance to them for over two years. At oral argument, they 8 suggested that Dr. Oklobdzija was simply too busy with his academic duties to provide them more 9 of his time and that other outside experts could have conflicts of interest that would prevent their 10 For the Northern District of California Moreover, TPL and Alliacense have already hired a competent outside expert, Dr. 7 United States District Court 6 retention by TPL and Alliacense. While the Court does not doubt that some outside experts may 11 have such conflicts, it is unpersuaded by TPL and Alliacense’s argument, and, in any case, Dr. 12 Oklobdzija’s retention would suggest that perfectly acceptable outside experts who do not have 13 conflicts of interest do, in fact, exist for TPL and Alliacense to hire.4 Otherwise, how would he have 14 been hired? B. Risk of Disclosure and Harm to HTC 15 TPL and Alliacense also argue that allowing Lum to review these documents presents no 16 17 risk of trade secrets to a competitor. First, TPL and Alliacense say that Lum is not engaged in 18 competitive decisionmaking. Motion at 10-11. This appears to be true: Lum declares that he does 19 not participate in the development of products, decisions about product pricing or design, or the 20 prosecution or reexamination of patents, has no personal or professional interaction with any 21 member of TPL’s product development team, and has no involvement in identifying prospective 22 licensees for the patents in suit. Lum Decl. ¶ 6. This Court has no reason to doubt his credibility. Second, TPL and Alliacense state that they are distinct entities and that Alliacense, Lum’s 23 24 employer, is not involved with product development. Motion at 11-12. As Mac Leckrone declares: 25 “Alliacense is the corporate entity responsible for licensing and enforcing the . . . four patents-in- 26 suit. While Co-Defendant TPL develops and markets products practicing the inventions at issue in 27 4 28 Indeed, TPL and Alliacense did not submit a declaration describing the steps they may have taken in their search for a suitable second expert who does not have a conflict of interest. 4 1 this case, Alliacense has no involvement whatsoever in TPL product development. Alliacense has its 2 own management, offices, file servers, and IT department, and the activities of the two corporate 3 entities are wholly separate and discrete.” Leckrone Decl. ¶ 2. But even if this is true, the two 4 entities are, at the very least, related, and disclosure to Alliacense, even with the protections TPL 5 and Alliacense propose, are cause for concern.5 Indeed, as HTC points out, in denying a motion 6 seeking access to an adverse party’s confidential information by an in-house counsel of a licensing 7 entity — which Alliacense is — Magistrate Judge Chen explained that “where the party asserting 8 infringement is in the business of acquiring intellectual property and enforcing it against other 9 entities using the allegedly infringing technology, ‘[t]here is little doubt’ that the alleged infringer’s For the Northern District of California United States District Court 10 confidential information could be of value.” Shared Memory Graphics, LLC v. Apple, Inc., No. 11 C10-02475 VRW (EMC), 2010 U.S. Dist. LEXIS 125184, at *7 (N.D. Cal. Nov. 12, 2010). And, 12 while Lum says that he is not engaged in licensing, he does directly report to Alliacense’s director 13 of licensing operations. Lum Decl. ¶ 5. In such a situation, this Court has already noted that it is 14 “skeptical about allowing even the most trustworthy of defendants’ employees to view such 15 sensitive information.” Acer Inc. et al. v. Technology Properties Limited et al., No. 5:08-cv-877, 16 Docket No. 130 (N.D. Cal. May 14, 2009). TPL and Alliacense cite some cases where courts have allowed an in-house employee of a 17 18 party to view confidential information of an opposing competitor where the employee had some 19 very specialized knowledge and did not engage in competitive decisionmaking. Motion at 7-12. But 20 crucial to the reasoning in these cases is that the moving party showed that no outside experts 21 existed who could sufficiently analyze the technology at issue. See, e.g., MGP Ingredients, Inc. v. 22 Mars Inc., 245 F.R.D. 497, 502 (N.D. Cal. 2007) (in-house personnel had substantial experience in a 23 narrow field that could not be replaced on the “open market”); Frees, Inc. v. McMillian, No. 05- 24 1979, 2007 WL 184889, at * 5 (W.D. La. Jan. 22, 2007) (opposing party provided no information to 25 refute moving party’s contention that it would be forced to hire an expensive outside expert, which 26 would be difficult because no experts currently have the particularized knowledge of the relevant 27 5 28 This is so even though, under their proposed amendment, Lum would only be able to review the Attorneys’ Eyes Only Chip Technical Documents at the offices of TPL and Alliacense’s counsel, Farella Braun + Martel. Motion at 12. 5 1 technology). As discussed above, the Court does not believe that TPL and Alliacense sufficiently 2 made such a demonstration. 3 HTC argues that many of the Attorneys’ Eyes Only Chip Technical Documents are 4 documents that were given to HTC by third party chip manufacturers, and those manufacturers did 5 so in reliance on the protections in the protective order. Opp’n at 8. Those manufacturers, HTC 6 argues, should get the benefit of their bargain. Id. HTC’s point is still well-taken. 7 In sum, the Court concludes that TPL and Alliacense have not established a “very good 8 reason” for modifying the protective order to allow Lum to review HTC’s highly confidential 9 documents. See Acer Inc. et al. v. Technology Properties Limited et al., No. 5:08-cv-877, Docket For the Northern District of California United States District Court 10 No. 130 (N.D. Cal. May 14, 2009). 11 CONCLUSION 12 Based on the foregoing, TPL and Alliacense’s motion to modify the protective order is 13 DENIED. 14 15 16 17 IT IS SO ORDERED. Dated: March 1, 2011 HOWARD R. LLOYD UNITED STATES MAGISTRATE JUDGE 18 19 20 21 22 23 24 25 26 27 28 6 1 C08-00882 JF (HRL) Notice will be electronically mailed to: 2 Deepak Gupta Eugene Y. Mar Heidi Lyn Keefe Jeffrey M. Fisher 3 4 5 6 John L. Cooper Kyle Dakai Chen Mark R. Weinstein Nan E. Joesten Stephanie Powers Skaff,,,,,,,,,,,,,,,,,,, 7 8 Counsel are responsible for distributing copies of this document to co-counsel who have not registered for e-filing under the court’s CM/ECF program. 9 For the Northern District of California United States District Court 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7