Case 1:14-cv-01430-LPS Document 430 Filed 07/23/21 Page 1 of 6 PageID #: 26183
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
`
`ELM 3DS INNOVATIONS, LLC,
`
`
`
`
`
`
`
`
`
`
`
`v.
`
`Plaintiff,
`
`SAMSUNG ELECTRONICS CO., LTD., et al.,
`
`
`
`
`
`
`
`Defendants.
`
`
`
`
`
`C.A. No. 14-cv-1430-LPS
`
`
`
`JURY TRIAL DEMANDED
`
`FILED UNDER SEAL
`
`LETTER TO THE HONORABLE JENNIFER L. HALL
`RESPONDING TO SAMSUNG’S DISCOVERY LETTER (D.I. 423)
`
`
`
`
`
`
`
`
`Dated: July 16, 2021
`
`
`
`
`
`
`
`
`Brian E. Farnan (#4089)
`Michael J. Farnan (#5165)
`FARNAN LLP
`919 North Market Street, 12th Floor
`Wilmington, DE 19801
`(302) 777-0300
`bfarnan@farnanlaw.com
`mfarnan@farnalaw.com
`
`Attorneys for Plaintiff Elm 3DS
`Innovations, LLC
`
`
`
`

`

`Case 1:14-cv-01430-LPS Document 430 Filed 07/23/21 Page 2 of 6 PageID #: 26184
`
`Dear Judge Hall,
`Plaintiff Elm 3DS Innovations, LLC respectfully requests that the Court deny Samsung’s
`motion, D.I. 423, for the reasons set forth below.
`
`I.
`
`Elm Will Produce the SK Hynix Settlement Agreement
`
`Although Elm does not agree that the settlement agreement with SK Hynix is a comparable
`license for damages purposes, in order to minimize the disputes the Court needs to resolve, Elm will
`agree to produce the settlement agreement to Samsung with an appropriate confidentiality
`designation under the protective order.
`
`II.
`
`Samsung’s Requested Discovery Regarding “Standing” Should Be Denied
`
`Samsung is using an unfounded standing theory as a pretext to obtain discovery into the
`deceased inventor Glenn Leedy’s estate. Elm 3DS Innovations, LLC (or Elm LLC) has produced all
`the necessary documents showing that it has owned the asserted patents from before the filing of
`this lawsuit through today. Samsung’s discovery requests concern who owns Elm LLC based on the
`inventor’s estate planning, not whether Elm LLC owns the patents. But Elm LLC’s ownership has
`nothing to do with standing and is irrelevant.
`It is notable what is not in dispute—that Elm LLC has owned the asserted patents from
`before this lawsuit through today. That fact is dispositive and shows the irrelevance of Samsung’s
`requested discovery. “Establishing ownership of a patent that has been infringed satisfies the
`requirements of Article III standing.” Pandrol USA, LP v. Airboss Ry. Prod., Inc., 320 F.3d 1354, 1368
`(Fed. Cir. 2003) (“there is no basis for questioning the plaintiffs’ standing” where there was a
`“signed and witnessed confirmation of assignment, indicating that plaintiff . . . was assigned the
`patent in suit . . . well before the filing of the complaint”); Drone Techs., Inc. v. Parrot S.A., 838 F.3d
`1283, 1294 (Fed. Cir. 2016) (patentee “established standing under § 281 by virtue of its status as the
`sole patentee (i.e., successor in title), and also satisfied Article III’s standing requirement by owning a
`patent that allegedly has been infringed”). Indeed, in reaffirming this standard in Pandrol, the Federal
`Circuit “only analyzed the relevant assignment records (i.e., the ownership information).” Drone
`Techs., 838 F.3d at 1293.
`To the extent that corporate form would be relevant at all to standing, it would only be to
`show that an entity did not actually own the asserted patents. See IOENGINE LLC v. Interactive Media
`Corp., No. CV 14-1571-GMS, 2017 WL 39563, at *3 (D. Del. Jan. 4, 2017) (corporate form only
`mattered to the extent that assignee did not technically exist at the time of patent assignment);
`Paradise Creations, Inc. v. UV Sales, Inc., 315 F.3d 1304, 1310 (Fed. Cir. 2003). But even then, Article
`III jurisdiction is not dictated by “gotcha” games based on a hyper-technical reading of state-law
`issues of corporate formation. IOENGINE LLC, 2017 WL 39563, at *3; see also 1 Treatise on the
`Law of Corporations § 6:10 (3d) (“A wrongdoer should not be allowed to quibble over
`incorporation defects to escape liability to the corporation.”).
`Elm LLC has owned the patents from 2014 through today. Elm LLC was assigned these
`patents upon its formation in 2014. Ex. A. (original conveyance was to 3DS IP Holdings, LLC,
`which changed its name to Elm 3DS Innovations, LLC); Ex. B. (name change). And when Mr.
`Leedy assigned his rights in the asserted patents to Elm LLC, he recorded that assignment in the
`United States Patent Office. Id. Nothing about Elm LLC’s owners or corporate form affects its
`ownership of the asserted patents at the time Elm LLC filed this complaint.
`
` 1
`
`

`

`Case 1:14-cv-01430-LPS Document 430 Filed 07/23/21 Page 3 of 6 PageID #: 26185
`
`Samsung’s single citation for the proposition that corporate formation can impact standing
`proves why Samsung’s theory is so misguided. In Paradise Creations v. UV Sales, Inc., a company
`agreed it did not have enforceable rights to the asserted patent at the time the complaint was filed
`based on its corporate formation. 315 F.3d 1304, 1306-07 (Fed. Cir. 2003). The company tried to fix
`this standing problem retroactively using state corporate law, which the Federal Circuit found was
`improper because the plaintiff did not have standing as of the filing of the complaint. Id. at 1309-10.
`The case makes clear the black-letter law of standing to maintain patent lawsuits: “the plaintiff must
`demonstrate that it held enforceable title to the patent at the inception of the lawsuit.” Id. at 1309.
`Elm has done so.
`Samsung’s discovery is focused on something else entirely. In 2016—two years after filing
`the complaint in this case—
`
`Notwithstanding Elm’s undisputed ownership of the asserted patents, Samsung’s theory is
`that a technical foot-fault as part of Mr. Leedy’s estate planning two years after the complaint was
`filed divests the Court of Article III jurisdiction. In Samsung’s words, Mr. Leedy’s estate planning
`may have “transferred [ownership of the LLC] without a corresponding action to make the
`transferee(s) members of Elm.” D.I. 423 at 2. And Samsung now seeks discovery into the formation
`of
`—including Mr. Leedy’s
`will and the specifics of the trusts formed for the benefit of non-parties who indisputably do not
`own the asserted patents. It is akin to saying Samsung must identify the terms of a stockholders’
`purchase of its stock to establish its standing in a lawsuit. That is a fishing expedition completely
`unmoored from any legitimate theory of standing.
`Of course, Elm disagrees with Samsung’s reading of Delaware law. Delaware courts interpret
`operating agreements and other agreements by giving priority to the parties’ intentions, construing
`the agreement as a whole, and giving effect to all its provisions. See Mehra v. Teller, C.A. No. 2019-
`0812-KSJM, 2021 WL 300352, *16 (Del. Ch. Jan. 29, 2021) (citing Salamone v. Gorman, 106 A.3d 354,
`368 (Del. 2014)). There is no evidence that any party in interest—including Elm LLC, Elm
`Corporation and the trusts—disputes the trust’s appointment as a member of Elm LLC. To the
`contrary, the Ratification document from earlier this year establishes the opposite: that everyone
`involved always intended the trust to be a member of Elm LLC. D.I. 423, Ex. B at 1-2. Further,
`even if Samsung were right, the foot fault would not affect Elm LLC’s capacity or standing to
`prosecute this case until Elm filed a “certificate of cancellation,” which has not happened. See
`Delaware LLC Act § 18-803(b) (“[u]pon dissolution of a limited liability company and until the filing
`of a certificate of cancellation …. the persons winding up the limited liability company’s affairs may,
`in the name of, and for and on behalf of, the limited liability company, prosecute and defend suits,
`whether civil, criminal or administrative …”).
`Samsung’s other complaints prove that it is just fishing for information about Mr. Leedy’s
`estate. For example, Elm LLC’s affairs are managed by Ron Epstein. Samsung claims that “without
`knowing who has the authority to act on Elm’s behalf with respect to this lawsuit, Samsung cannot
`be sure that any resolution reached in this matter would be binding on Elm.” D.I. 423 at 2. But Elm
`has shown that
`
` 2
`
`

`

`Case 1:14-cv-01430-LPS Document 430 Filed 07/23/21 Page 4 of 6 PageID #: 26186
`
`Leedy was express in his trust declaration that
`
`
`
`Samsung’s Complaints About Elm’s Privilege Log Are Unfounded
`
`Indeed, Mr.
`
`More fundamentally, however, Elm
`LLC owns the patents, not Mr. Epstein. The identities of and agreements with the people who
`manage a company’s affairs do not dictate whether that company can constitutionally sue for patent
`infringement. For example, Samsung does not have to prove that Mr. Ki Nam Kim is really its CEO
`before it can establish federal subject-matter jurisdiction over a patent case.
`Samsung also questions the Ratification document that was entered and says it needs
`discovery into the formation of Mr. Leedy’s estate, including communications with Mr. Epstein and
`others (likely Mr. Leedy’s lawyers) involved in the formation of the trust. D.I. 423 at 2. These
`documents have nothing to do with Elm’s undisputed ownership of the patents in suit. They are
`instead requests to pry into the affairs of the deceased inventor and his surviving children.
`Samsung has not articulated a theory of relevance, let alone a theory with any support in the
`law. Its failure to even acknowledge the hornbook law of standing in patent cases proves as much.
`The Court should deny Samsung’s request.
`
`III.
`
`Elm has made good-faith efforts to address issues Samsung has raised regarding Elm’s
`privilege log. Elm initially served its log on August 28, 2020. Ex. F, 8/28/20 Elm Priv. Log.
`Samsung waited more than six months before raising any issues. Ex. G, 3/1/21 Brann Ltr. In
`response to Samsung’s letter, Elm took a careful second look at the more than 2,700 documents on
`its log. Elm produced 327 documents from the log and provided additional information about
`hundreds of documents. Ex. H, 5/25/21 Taylor email; D.I. 423, Ex. E, 5/24/21 Elm Am. Priv.
`Log. Notwithstanding Elm’s efforts, Samsung is still complaining to the Court about hundreds of
`documents on Elm’s log.
`
`Samsung first complains that Elm’s privilege log does not identify the author, sender, or
`recipient of some documents. As Elm has explained to Samsung, Elm has provided author, sender,
`and recipient information where it is available, but there are many documents on Elm’s log that were
`scanned hard copy documents for which some or all of that information is not available. Ex. H,
`5/25/21 Taylor email. Nevertheless, the privileged nature of the documents is apparent on their
`face, and Elm provided adequate privilege descriptions. Samsung is incorrect that Elm must identify
`the author, sender, and recipient of documents in order to justify a claim of privilege under Rule
`26(b)(5)(A). Indeed, the vast majority of entries on Samsung’s own privilege log do not provide this
`information. See Ex. I, 10/16/20 Samsung Priv. Log (providing no author, sender, or recipient
`information for 37 out of 47 entries).
`
`Samsung next argues that Elm must produce communications between Glenn Leedy and
`attorney Ron Epstein. It is true, as Samsung points out, that at first the relationship between Mr.
`Leedy and Mr. Epstein was not legal in nature. See D.I. 423, Ex. G, 4/29/10 Patent Broker
`Agreement § 10. That is why Elm has produced hundreds of communications between Mr. Leedy,
`Mr. Epstein, and other Epicenter employees, including in response to Samsung’s complaints about
`Elm’s privilege log.
`
`
` 3
`
`

`

`Case 1:14-cv-01430-LPS Document 430 Filed 07/23/21 Page 5 of 6 PageID #: 26187
`
`Later, Mr. Epstein did become Mr. Leedy’s and Elm’s lawyer, as memorialized in the July 8,
`2013 representation agreement between Elm and Epicenter Law. D.I. 423, Ex. K, Representation
`Agreement § 1(a) (“Epicenter Law, P.C. will represent Elm Technology Corporation to perform
`legal services related to the monetization of the Elm Technology Corporation Portfolio . . . through
`licensing, sale, or other disposition . . . .”). Samsung argues that the attorney-client privilege began
`on July 8, 2013, and any communications before that date are not privileged. D.I. 423 at 4. That is
`not how privilege works. The attorney-client privilege can exist before the client and lawyer sign a
`formal engagement agreement if the client is seeking or the lawyer is providing legal advice. See, e.g.,
`Barton v. U.S. Dist. Court for Central Dist. of Cal., 410 F.3d 1104, 1111 (9th Cir. 2005) (“Prospective
`clients’ communications with a view to obtaining legal services are plainly covered by the attorney-
`client privilege under California law, regardless of whether they have retained the lawyer, and
`regardless of whether they ever retain the lawyer.”); In re Bevill, Bresler & Schulman Asset Mgmt. Corp.,
`805 F.2d 120, 124 n.1 (3d Cir. 1986) (“The attorney-client privilege protects conversations between
`prospective clients and counsel as well as communications with retained counsel.”). Accordingly,
`Elm has appropriately claimed privilege over a relatively small number of communications between
`Mr. Leedy and Mr. Epstein/Epicenter that pre-date July 8, 2013, but which nevertheless involve
`seeking or providing legal advice.1
`
`Samsung does not dispute that communications between Elm and Mr. Epstein dated after
`July 8, 2013, can be privileged, but Samsung argues for a subject-matter waiver. Samsung does not
`come close to meeting the high bar for subject-matter waiver, which is “reserved for those unusual
`situations in which fairness requires a further disclosure of related, protected information, in order
`to prevent a selective and misleading presentation of evidence to the disadvantage of the adversary.”
`Hawk Mountain LLC v. Mirra, No. 13-2083-SLR-SRF, 2016 WL 690883, *2 (D. Del. Feb. 19, 2016)
`(quoting Fed. R. Evid. 502(a) advisory cmte. note to 2008 amendment). Samsung has not even
`identified the subjects over which it contends there has been a waiver, much less explained how
`fairness would require production of additional privileged communications on the unnamed
`subjects. Instead, Samsung simply attached three documents that Elm produced in response to
`Samsung’s earlier complaints that the communications were not privileged at all. D.I. 423, Exs. H-J.
`None of these documents could possibly result in a broad subject-matter waiver. Indeed, Exhibit J
`has nothing to do with Elm at all; it is an email about a draft patent sale offering for an entirely
`different company,
`
`
`Finally, Samsung incorrectly argues that Elm cannot claim privilege over any
`communications seeking legal advice regarding patent licensing “[b]ecause Elm’s business is patent
`licensing.” D.I. 423 at 4. There is no exception to the attorney-client privilege for companies like
`Elm that have a significant focus on licensing or enforcing their patents. Elm’s engagement
`agreement with Epicenter Law states that Epicenter would “perform legal services related to the
`monetization” of Elm’s patent portfolio including “through licensing, sale or other disposition.” D.I.
`423, Ex. K at 1 (emphasis added). The Immersion Corp. v. HTC Corp. case on which Samsung relies is
`
`
`1 Samsung says that Elm refuses to produce “ElmPriv_490, ElmPriv_584, and ElmPriv_651-660.”
`D.I. 423 at 4. That is not true. Elm informed Defendants several weeks ago that it would produce all
`those documents except for ElmPriv_660, which is an email that includes litigation counsel. Ex. J,
`6/28/21 Taylor email. Upon further review, Elm will also agree to produce the following documents
`that predate July 8, 2013: ElmPriv_517, 527, 564, 573, 671, 672, 679, 683, 684, 705, 709, 714, and
`753.
`
` 4
`
`

`

`Case 1:14-cv-01430-LPS Document 430 Filed 07/23/21 Page 6 of 6 PageID #: 26188
`
`distinguishable because the documents at issue there were all “created by a financial consultant in aid
`of Immersion’s licensing program,” and there was “no evidence” the documents were “transmitted
`for the purpose of providing legal advice.” No. 12-259-RGA, 2014 WL 3948021, at *2 (D. Del. Aug.
`7, 2014). Here, by contrast, the communications directly involve lawyers, and the engagement
`agreement specifically states that those lawyers would be providing legal advice related to licensing
`activities.
`
`
`IV. Elm’s Redactions to the Epicenter Law Engagement Agreement are
`Appropriate
`
`
`Elm produced a redacted version of Elm’s engagement agreement with Epicenter Law.
`D.I. 423, Ex. K. That version of the agreement shows the existence of the attorney-client
`relationship and shows all provisions relevant to Epicenter’s fees and compensation. Id. The
`remaining parts of the engagement agreement deal with other aspects of the attorney-client
`relationship that remain privileged. Elm properly redacted those parts of the agreement.
`Engagement agreements generally are privileged. See, e.g., Stoba v. Saveology.com, LLC, No. 13cv2925,
`2015 WL 10857528, *4 (S.D. Cal. July 7, 2015). Samsung cites authority stating that “fee
`arrangements” are not privileged, D.I. 423 at 5, but Elm has not redacted the portions of the
`engagement letter that spell out the fee arrangement. In addition, Samsung has failed to even show
`that the non-remunerative provisions of Epicenter Law’s agreement with Mr. Leedy would be
`relevant to any party’s claims or defenses. Accordingly, the Court should deny Samsung’s request for
`an unredacted copy of the Epicenter Law engagement agreement.
`
`V.
`
`Samsung’s Request to Depose Ron Epstein for Four Days is Excessive and
`Unreasonable
`
`
`Samsung mischaracterizes Elm’s position regarding Mr. Epstein’s deposition. Elm has
`offered to make Mr. Epstein available for two days of deposition – fourteen hours on the record.
`Elm has further offered to meet and confer with Samsung in the event that, after two days on the
`record, Samsung believes it needs more time with Mr. Epstein. Elm reiterates that offer here.
`No competent lawyer could need more than two days on the record with Mr. Epstein to
`cover his personal knowledge of relevant issues and his 30(b)(6) topics.2 Whether in his personal or
`corporate capacity, Mr. Epstein has little, if any, information to offer on issues of infringement or
`validity. He cannot see Samsung confidential information, so he cannot compare the accused
`products to the asserted claims. He is not an expert and will not be offering an opinion on validity.
`And unlike Mr. Leedy, he is not the inventor of the asserted patents and only became involved with
`Elm much later. Samsung should easily be able to cover the issues where Mr. Epstein can offer
`substantive testimony, such as Elm’s corporate structure and licensing history, in fourteen hours.
`
`
`
`
`
`
`Respectfully submitted,
`
`
`
`
`
`
`/s/ Brian E. Farnan
`
`
`
`
`
`
`Brian E. Farnan
`cc: Counsel of Record (Via E-Mail)
`
`2 Attached as Exhibits K, L, and M are Defendants’ common 30(b)(6) notice, Samsung’s 30(b)(6)
`notice, and Elm’s email designating Mr. Epstein as to certain topics.
`
` 5
`
`