MEMORANDUM AND ORDER
LYLE E. STROM, Senior District Judge.
This matter is before the Court on the motion of plaintiff Prism Technologies, LLC ("Prism"), filed pursuant to Federal Rule of Civil Procedure 37(a), to compel defendant Trend Micro Incorporated ("Trend") to respond to various discovery requests (Filing No.
I. Federal Rules of Civil Procedure 26(b) and 37(a).
""Mutual knowledge of all the relevant facts gathered by both parties is essential to proper litigation." Hickman v. Taylor, 329 U.S. 495, 507 (1947). Federal Rule of Civil Procedure 26(b) allows for broad discovery of "any nonprivileged matter that is relevant to any party's claim or defense. . . ." Fed. R. Civ. P. 26(b)(1). Relevance is to be broadly construed for discovery issues and encompasses "any matter that bears on, or that reasonably could lead to other matter that could bear on, any issue that is or may be in the case." Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978). However, the proponent of discovery must make "[s]ome threshold showing of relevance . . . before parties are required to open wide the doors of discovery and to produce a variety of information which does not reasonably bear upon the issues in the case." Hofer v. Mack Trucks, Inc., 981 F.2d 377, 380 (8th Cir. 1992). "Determinations of relevance in discovery rulings are left to the sound discretion of the trial court. . . ." Hayden v. Bracy, 744 F.2d 1338, 1342 (8th Cir. 1984).
In the event of noncompliance with a discovery request for relevant information, Rule 37(a) provides, "[A] party may move for an order compelling disclosure or discovery." Fed. R. Civ. P. 37(a)(1). "The party resisting production bears the burden of establishing lack of relevancy or undue burden." St. Paul Reinsurance Co., Ltd. v. Commercial Fin. Corp., 198 F.R.D. 508, 511 (N.D. Iowa 2000).
II. Prism's Motion to Compel.
Prism seeks an order granting its motion to compel Trend to respond to several discovery requests,
With regard to Trend, Prism produced initial infringement contentions on September 6, 2011 (Ex. 3, Filing No.
In response to Prism's November 18, 2011, supplemental infringement contentions, Trend and the other defendants at the time moved for a protective order with this Court (Filing No.
However, also in the December 14, 2011, order, this Court stated, "Should other infringement theories evolve as discovery continues, the Court assumes that Prism will be able to explain why it could not have raised the issues earlier" (Filing No.
This Court's more liberal policy of allowing Prism to supplement its infringement contentions last December, ten months before trial and almost a month before the major Markman hearing, should not have been taken as a carte blanche that would allow for supplementation at anytime thereafter. Adding thirty-six infringement contentions at this late date in the discovery process cannot possibly be in accord with "the primary purpose of [patent infringement contentions, which] is to give a defendant notice of a plaintiff's specific theories of infringement." Honeywell Intern. Inc. v. Acer America Corp., 655 F.Supp.2d 650, 655 (E.D. Tex. 2009). Even though Trend itself did identify the additional thirty-six CD/DVD products in its answer to Prism's Interrogatory No. 1, Trend still would have no way of knowing whether or not Prism intended to claim infringement of these products without timely supplemental infringement contentions to that effect.
Prism states that Interrogatory Nos. 12-14 seek "damages-related information" (Filing No.
Interrogatory No. 18 requests, "For each software product identified by you in response to Prism Interrogatory No. 1, identify with specificity (e.g., name and version number) each software activation system used by you to control the activation of that product over the Internet" (Ex. 27, Filing No.
Although the forty-three CD/DVD products were identified by Trend on November 18, 2011, Interrogatory No. 18 was not served on Trend until March 20, 2012, four months later, and two months after the January 12, 2012 Markman hearing. The Court finds that Prism has not shown good cause as to why this interrogatory, which asks for "basic information" and seems to be leading to the newly proposed infringement contentions, could not have been issued months earlier, before the January 12, 2012, Markman hearing, so that responses could have led to supplemental infringement contentions at a reasonable time in the discovery process. Even a prompt response from Trend in April 2012 would have necessitated Prism to supplement its infringement contentions within only days or weeks of the close of discovery, which the Court finds to be too late to afford Trend adequate notice.
As to the naming problem, the Court is surprised that its help is needed with such an elementary issue. Nevertheless, to the extent that direction is required, Trend will use whatever "uniform naming convention" is necessary so that its interrogatory responses for each product can be understood to correspond to products previously identified to Prism.
Accordingly, the Court grants Prism's motion to compel Trend to produce full, complete, and correct responses to Interrogatory Nos. 12-14 and 18, but only as to the accused products identified in Prism's infringement contentions dated September 6, 2011, and November 18, 2011. Trend shall answer such interrogatories fully and completely to the extent it has not already done so, using uniform naming conventions. In all other respects, Prism's motion to compel Trend to produce responses to Interrogatory Nos. 12-14 and 18 will be denied.
Trend responds that "Trend Micro does not store costs data on a per-product basis," quoting its corporate designee: "
The Court will not require Trend to produce information Trend has avowed to the Court is impossible to produce. Accordingly, Prism's motion to compel as to Interrogatory No. 15 will be denied. Interrogatory No. 29 states:
Prism explains, "This interrogatory is not limited to a software component, and Trend has not explained why it cannot provide costs associated with, for example (and without limitation): technology and patent licenses; the purchase and operation of servers, databases, and other hardware and infrastructure components; and the materials and labor used to build, operate and maintain the various components of Trend's activation systems and methods" (Filing No.
Request for Production of Documents No. 54 "asks for documents sufficient to show the costs and/or expenses deducted by Trend from net revenues to calculate net profits for the accused technology" (Filing No.
Prism replies, "[S]preadsheet TM90000386 (Exhibit 37) — purportedly responsive to RFP No. 54 — does not contain costs/expenses data to show how Trend derives net profits from net revenues on a per-product basis, as requested in the RFP. Rather, it contains only a single `Cost of Goods Sold' line item" (Filing No.
The Patent Act states that "whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent." 35 U.S.C. § 271(a). At issue with this motion is whether all elements of an accused system must exist on U.S. soil in order for the infringement to occur "within the United States."
Prism alleges that Trend has infringed U.S. Patent No. 7,290,288 ("`288 patent") in connection with software sold to end users who live outside the territorial United States. Prism states, "The patent claims asserted in this case by Prism include `system' claims, which, under well-established law, can be infringed in the United States even if some elements of the accused system [here, the access key and the client computer] are located outside the United States" (Filing No.
Prism does not appear to contend that the customer who activates Trend's software outside the United States "uses" the software in the context of its claims of infringement by Trend. Rather, Prism's argument stems from its contention that Trend's customers are not the only users of the accused system. Prism states that it will argue at trial that "Trend makes its own use of the infringing system for its own benefit. Indeed, Prism will seek to prove that Trend directly infringes by controlling and operating its activation system to its own advantage, namely anti-piracy and license enforcement benefits" (Filing No.
In support of its contention that foreign sales do lead to infringement by Trend, Prism cites Uniloc USA, Inc. v. Microsoft Corp., 632 F.Supp.2d 147 (D.R.I. 2009) ("Uniloc I"), which Prism claims addresses the "precise circumstances of this case" (Filing No.
Uniloc I, 632 F. Supp. 2d at 155. With regard to a system claim of a patent, which both parties agree is at issue here, the Uniloc I court noted, "use of a system claim may give rise to infringement (and thus be included in damages) if the United States is `the place at which the system as a whole is put into service,' i.e., `the place where control of the system is exercised and beneficial use of the system is obtained.'" Id. at 156 (quoting NTP, Inc. v. Research in Motion, Ltd., 418 F.3d 1282, 1317-18 (Fed. Cir. 2005)). Therefore, "a claim of infringement is only actionable (and inclusion of foreign licenses in the damages calculation proper) if the United States is `the place at which the system as a whole is put into service;' i.e., `the place where control of the system is exercised and beneficial use of the system is obtained.'" Id.
The Uniloc I court noted, "When foreign individuals obtain licenses and activate their Microsoft software via the Microsoft Clearinghouse in the United States, the MPA system truly is (as both parties acknowledge) `partly within and partly outside' the United States for purposes of infringement under Uniloc's § 271(a) theory, a system not unlike NTP." Uniloc I, 632 F. Supp. 2d at 156. The Uniloc I court rejected Microsoft's conclusion that "all parts of a collective system must be within the United States to infringe," stating that this was "the argument NTP rejected." Id. The Uniloc I court resolved the issue in this way:
Id. at 156-57. Here, Prism argues for a similar result: "Likewise, there is a fact-intensive inquiry yet to be performed by the jury in this case on the question of foreign activations, and Prism must be permitted to present relevant evidence, including damages evidence, on that question" (Filing No.
In its opposition to Prism's motion, Trend relies on the Federal Circuit's analysis of the word "use" in a case that "turn[ed] on what constitutes `use' of a system or apparatus claim under § 271(a)." Centillion Data Sys., LLC v. Qwest Communic'ns Int'l, Inc., 631 F.3d 1279, 1283 (Fed. Cir. 2011). In Centillion, the Federal Circuit noted, "We have never directly addressed the issue of infringement for `use' of a system claim that includes elements in the possession of more than one actor. However, we defined the term in a very similar scenario in NTP." Centillion, 631 F.3d at 1283. The Centillion court concluded, "We hold that to `use' a system for purposes of infringement, a party must put the invention into service, i.e., control the system as a whole and obtain benefit from it." Id. at 1284 (citing NTP, 418 F.3d at 1317). The court stated that while a user need not have "physical or direct control" over every part of an accused system, nevertheless, the user must "use" every element of the accused system. Centillion, 631 F.3d at 1284.
Applying this standard to the facts before it, the Centillion court concluded, "We agree with Qwest that, as a matter of law, it does not `use' the patented invention under the appropriate test from NTP. To `use' the system, Qwest must put the claimed invention into service, i.e., control the system and obtain benefit from it." Id. at 1286. "While Qwest may make the back-end processing elements, it never `uses' the entire claimed system because it never puts into service the personal computer data processing means. Supplying the software for the customer to use is not the same as using the system." Id.
Trend emphasizes the fact that both NTP and Centillion established that "the use of the system as a whole" occurs where the end user, or customer, "puts the system into service" (Filing No.
In Centillion, the patent at issue disclosed "a system for collecting, processing, and delivering information from a service provider, such as a telephone company, to a customer." Centillion, 631 F.3d at 1281. The Centillion court considered two "manners of operation" of the Qwest accused system. Id. at 1285. "First, there is an on-demand function where a customer seeks particular and specified information by creating a query that the Qwest back-end system processes and provides a result for download (on-demand operation)." Id. "Second, during the normal functioning of the system after a user subscribes, Qwest's back-end systems create periodic summary reports (standard operation) which are available for the user to download." Id.
Here, Prism is accusing Trend of infringing only one system claim, Claim 187. Prism states that its "allegations are different [from the Centillion case]; Claim 187 does not involve a customer's on-demand operation of software, and Prism is not making a `use-of-software' claim against Trend. Instead, Claim 187 is about `controlling access to protected computer resources,' which Trend does for its own benefit, without regard for customer demand" (Filing No.
Prism also cites the Federal Circuit's opinion from the second iteration of the Uniloc litigation, wherein defendant Microsoft maintained that "Uniloc failed to prove direct infringement because Microsoft did not supply or use the end-users' computers that implemented the local licensee unique ID generating means and mode switching means." Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292, 1308 (Fed. Cir. 2011), reh'g denied (Mar. 22, 2011) ("Uniloc II"). In rejecting Microsoft's argument, the Federal Circuit stated, "That other parties are necessary to complete the environment in which the claimed element functions does not necessarily divide the infringement between the necessary parties." Uniloc II, 632 F.3d at 1309. "For example, a claim that reads `An algorithm incorporating means for receiving e-mails' may require two parties to function, but could nevertheless be infringed by the single party who uses an algorithm that receives e-mails." Id.
At this stage of the litigation, the Court cannot say whether or not Prism's theory of Trend's "use" of the accused system will succeed. However, the Court finds that Prism's discovery requests are relevant to its infringement claim involving Trend's accused use of its system, even when one component of the system is physically located outside of the United States. Accordingly,
IT IS ORDERED that Prism's motion to compel (Filing No.
1) Prism's motion to compel Trend to produce responses to Interrogatory Nos. 12-14 and 18 is granted, but only as to the accused products identified in Prism's infringement contentions dated September 6, 2011, and November 18, 2011. Trend shall answer such interrogatories fully and completely to the extent it has not already done so, using uniform naming conventions. In all other respects, Prism's motion to compel Trend to produce responses to Interrogatory Nos. 12-14 and 18 is denied;
2) Prism's motion to compel Trend to produce responses to Interrogatory Nos. 15 and 29 is denied;
3) Prism's motion to compel Trend to produce responses to Requests for Production of Document Nos. 50 and 54 is granted. Trend shall either produce the requested information, or, if the requested information does not exist, Trend shall inform the Court of that fact by an affidavit filed on or before August 8, 2012;
4) On or before August 8, 2012, Trend will substantively respond to Prism's Fourth Set of Requests for Production (Requests 102-103) and Prism's Sixth Set of Interrogatories (Nos. 21-23); and
5) Trend will file with the Court a certificate of compliance with this order on or before August 8, 2012.