Case 1:17-cv-00868-CFC-SRF Document 250 Filed 08/18/20 Page 1 of 4 PageID #: 9799
`Case 1:17-cv-00868-CFC-SRF Document 250 Filed 08/18/20 Page 1 of 4 PageID #: 9799
`
`FARNANlll’
`
`August 11, 2020
`
`VIA E—FILING
`
`The Honorable Sherry R. Fallon
`
`J. Caleb Boggs Federal Building
`844 N. King Street
`Wilmington, DE 19801-3568
`
`RE: University ofMassachusetts, et al. v. I. ’OréaI USA, Inc.
`
`(CA. No. 17-cv-868-CFC—Sflj)
`
`Dear Magistrate Judge Fallon,
`
`At the June 12, 2020 deposition of Dr. Angelike Galdi—L’Oréal’s 30(b)(6) witness on
`topics regarding the testing of the Accused Products—L’Oréal revealed, for the first time, that it
`tests, develops, and manufactures products containing adenosine in the United States for final
`sale outside of the United States. L’Oréal was required by the Scheduling Order and its discovery
`responses to produce this information, but L’Oréal did not do so.
`
`Accordingly, Plaintiffs request that the Court order L’Oréal to produce—for the Accused
`Products that were tested, developed, and/or manufactured in the United States—the same
`categories of data that L’Oréal produced for domestic sales of the Accused Products from 2011—
`2018. Plaintiffs also request that the Court order L’Oréal to produce documents sufficient to
`show the details of any sale of such products between L’Oréal USA and any other L’Oréal
`entity, and that L’Oréal designate a 30(b)(6) witness to provide testimony on these topics. As
`explained in the attached Declaration fi'om Plaintiffs’ damages expert, this missing information
`is important to Plaintiffs’ damages case. See Exhibit A at 1“] 8-11.
`
`Documents Regarding Foreign Sales of the Accused Products Reguested by RFPs 38, 39a
`and 48 and reguired by Paragraph 6 of the Scheduling Order.
`
`A.
`
`L’Oréal Has Not Produced Foreign Sales Data.
`
`L’Oréal has not produced foreign sales data for the Accused Products that are tested,
`developed, or manufactured in the United States for abroad, despite L’Oréal’s obligation to
`produce that information.
`
`The Scheduling Order required L’Oréal to produce “[d]ocuments sufficient to show the
`sales, revenue, cost, and profits for the Accused Instrumentalities identified” in Plaintiffs’
`Infringement Contentions. D.I. 46 at 1I6. Plaintiffs’ Infringement Contentions listed the Accused
`Products at issue in this action and disclosed that “Plaintiffs hereby accuse, not only the products
`specified in the list and each chart, but also all of Defendant’s products that contain adenosine
`that reaches the dermal layer .
`.
`. including but not limited to products that are comprised of the
`same or substantially similar combinations of ingredients and/or with the same or substantially
`similar formulations as the products identified in the accompanying charts.” Exhibit B at 3.
`The claim charts Plaintiffs disclosed with their Infringement Contentions further stated that the
`Accused Product “includes but is not limited to the product listed .
`.
`. as well as other
`substantially identical products sold under other names with substantially identical ingredients,
`
`

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`Case 1:17-cv-00868-CFC-SRF Document 250 Filed 08/18/20 Page 2 of 4 PageID #: 9800
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`formulations, and marketing and/or advertising and/or website materials that L’Oréal designs,
`produces, sells and disseminates.” Exhibit C. L’Oréal should have produced any foreign sales
`data for any such products pursuant to Paragraph 6(d) of the Scheduling Order, but did not do so.
`
`L’Oréal similarly did not produce this data even though it was responsive to Plaintiffs’
`discovery requests. Plaintiffs’ Request for Production 38 asked for documents sufficient to show
`“all sales, cost, and revenue information, by number of units sold and by dollars of revenue, for
`the Accused Products . . . .” Exhibit D. L’Oréal agreed to produce “non-privileged documents
`reflecting the sales, cost, and revenue information for the Accused Products in its possession,
`custody, or control that L’Oréal USA has been able to locate after a reasonably diligent search.”
`Id. Plaintiffs requested—and L’Oréal agreed to produce—related sales information in Requests
`for Production 39 and 48. Id. Nothing in Plaintiffs’ Requests for Production excluded foreign
`sales information from the Requests, and L’Oréal did not object to producing any such
`information in its Responses and Objections to those specific Requests. The only objection to
`producing foreign sales information that L’Oréal did raise was in response to Plaintiffs’
`Interrogatories that requested information regarding “sales made in any other country”. Exhibit
`E. L’Oréal did not explain at that time that it had relevant foreign sales information but refused
`to produce it: instead, L’Oréal lodged a rote objection stating that it would not provide
`information regarding international sales because “[w]ith respect to method patents, actionable
`patent infringement cannot occur outside the United States.” Id.
`
`It was not until Dr. Galdi revealed that L’Oréal tests, develops, and manufactures the
`Accused Products in the United States for sale abroad that Plaintiffs became aware that foreign
`sales of the Accused Products were the result of domestic infringement.1 Plaintiffs promptly
`raised this issue upon that discovery.2
`
`B.
`
`L’Oréal Tests, Develops, and Manufactures the Accused Products in the
`United States for Sale Abroad.
`
`Dr. Galdi testified that L’Oréal tests, develops, and manufactures the Accused Products
`in the United States, including for those products that are sold outside of United States. Exhibit
`H at 289:18-290:11. Testing of the Accused Products in a way that practices the asserted
`patents constitutes infringement under 25 U.S.C. § 271(a). See also Roche Products, Inc. v.
`Bolar Pharmaceuticals Co., Inc., 733 F.2d 858, 863 (Fed. Cir. 1984) (“[U]nlicensed experiments
`conducted with a view to the adaption of the patented invention to the experimentor’s business is
`a violation of the rights of the patentee . . . .”) Likewise, any use of the asserted patents during
`the development or manufacturing of the Accused Products would constitute infringement under
`35 U.S.C. § 271(a). Any such use of products containing adenosine within the United States
`
`1 L’Oréal’s foreign parent, L’Oréal S.A., further threw Plaintiffs off the scent of relevant foreign
`sales by representing in its Motion to Dismiss briefing that “[u]nlike L’Oréal S.A., L’Oréal USA
`is active in the United States”. D.I. 24 at 3-4.
`2 Promptly after the Court’s June 23 Discovery Hearing, the parties exchanged email
`correspondence on these issues and met and conferred on June 29. Exhibit F. Following that
`meet and confer, L’Oréal requested additional information to consider Plaintiffs’ position, which
`Plaintiff provided on June 30. Id. The parties further met and conferred on July 9 but reached
`an impasse. Exhibit G.
`
`2
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`

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`Case 1:17-cv-00868-CFC-SRF Document 250 Filed 08/18/20 Page 3 of 4 PageID #: 9801
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`would constitute domestic infringement under 35 U.S.C. § 271(a), even if those products were
`ultimately sold abroad, because the infringing use took place within the United States.
`
`C.
`
`Foreign Sales of Accused Products Can Be Recoverable as Damages.
`
`Any foreign sales of the Accused Products that resulted from L’Oréal’s use of the
`asserted patents within the United States are recoverable as damages in this action. In
`WesternGeco L.L.C. v. Ion Geophysical Corp., the Supreme Court held that worldwide patent
`damages may be awarded for acts of domestic infringement under 35 U.S.C. § 271(f) because
`“the damages themselves are merely the means by which [the Patent Act] achieves its end of
`remedying infringements”. 138 S.Ct. 2129, 2138 (2018). Courts in this jurisdiction and
`elsewhere have applied WesternGeco’s reasoning to claims—like the ones in this case—alleging
`infringement under § 271(a) and have allowed recovery for worldwide patent damages when
`those damages resulted from domestic acts of infringement. See, e.g., Power Integrations, Inc. v.
`Fairchild Semiconductor Int’l, Inc., 2018 WL 4804685, at *1 (D. Del. 2018 Oct. 4, 2018);
`Plastronics Socket Partners, Ltd. v. Don Weon Hwang, 2019 WL 4392525, at *4-5 (E.D. Tex.
`June 11, 2019) (“[D]omestic infringement under § 271(a) is compensable even if the damages
`occurred abroad.”).
`
`Although WesternGeco involved a claim to recover lost profits, courts have extended
`WesternGeco’s holding to cases, like this one, where patent holders sought a reasonable royalty.
`See SIMO Holdings, Inc. v. Hong Kong uCloudlink Network Technology Ltd., 396 F.Supp.3d
`323, 350-51 (S.D.N.Y. 2019); ABS Global, Inc. v. Inguran, LLC, 2020 WL 2405380, at *9 (W.D.
`Wis. May 12, 2020). And courts have allowed such discovery for method claims, like the claims
`in this case. See W.H. Wall Family Holdings LLLP v. CeloNova Biosciences, Inc., 2020 WL
`1644003, *2-*3 (W.D. Tex. 2020) (“[C]ourts have found that information regarding foreign sales
`activity is discoverable in infringement cases brought under § 271(a).”).
`
`It is thus well established that foreign sales that result from domestic infringement are
`recoverable as damages. As Dr. Galdi and other L’Oréal witnesses have testified, L’Oréal USA
`does not sell products without testing them, and L’Oréal USA tests its products in the United
`States. See Exhibit H at 251:14-17 and Exhibit I 66:17-23; see also Exhibit J at 35:8-16
`(confirming that L’Oréal tests its products before sale); Exhibit K at 76:14-16 (same); Exhibit
`L at 73:8-10 (same); Exhibit M at 18:10-11 (same); Exhibit N (Expert Report of Dr.
`Michniak-Kohn). Any sale of such products outside of the United States would be the direct
`result of their testing within the United States, so their foreign sale would be the result of the
`asserted patents’ domestic infringement. To the extent that the development and manufacturing
`of those products involved the use of the asserted patents, the foreign sale of those products
`would also be the result of domestic infringement. Because these sales can be recovered as
`damages in this action, they are a proper source of discovery. See Elm 3DS Innovations LLC v.
`Micron Technology, Inc. et al, No. 14-cv-1431 (D. Del. Oct. 30, 2019) D.I. 204 (ordering alleged
`infringer to produce “worldwide revenue information”, in part because “Plaintiff has [ ] pled
`facts that support its claim for damages when Defendant’s domestic activities result in foreign
`sales”) at Exhibit O.
`
`
`3
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`

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`Case 1:17-cv-00868-CFC-SRF Document 250 Filed 08/18/20 Page 4 of 4 PageID #: 9802
`Case 1:17-cv-00868-CFC—SRF Document 250 Filed 08/18/20 Page 4 of 4 PageID #: 9802
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`D.
`
`Foreign Sales Data Should Be Produced.
`
`L’Oréal’s foreign sales data regarding Accused Products that are tested, developed, or
`manufactured in the United States for sale abroad are thus directly relevant to Plaintiffs’ damages
`in this case and should have been produced. See J. Davis Decl. at 118-11. Accordingly, Plaintiffs
`request that the Court order L’Oréal to produce the same categories of foreign sales data that
`L’Oréal has produced for domestic sales of the Accused Products. Plaintiffs request that this
`information apply to products that have the same or substantially similar formula, even if they
`are tested, developed, manufactured or sold within the United States lmder one product name but
`later sold abroad under a different product name. L’Oréal witnesses have testified that L’Oréal
`generally uses one formulation for its products, whether those
`roducts are sold in the United
`States or abroad. See Exhibit H at 479:4—9
`
`see also Exhibit I at 30:21-25
`
`
`
`
`
`Plaintiffs also request that L’Oréal produce documents sufficient to show the details of
`any sale between L’Oréal USA and any other L’Oréal entity, a transaction referred to by Diego
`Balo—L’Oréal’s 30(b)(6) witness on finance issues—as a “group” sale. Exhibit P at 63:4—6.
`This request includes profit or revenue information from other L’Oréal entities on any resale of
`the product to non-affiliated buyers. This information is needed to calculate an appropriate base
`for Plaintiffs’ damages expert’s calculation for products tested, developed, or manufactured
`within the United States for sale abroad. See Exhibit A at {M 8-11.
`
`30
`
`Witness On Related Issues
`
`tests, develops, and manufactures the
`Immediately upon discovering that L’Oréal
`Accused Products in the United States for sale abroad, Plaintiffs issued a 30(b)(6) deposition
`notice on those topics. See Exhibit Q. This discovery is relevant to further establish the nexus
`between L’Oréal’s testing, development, and manufacturing of products within the United States
`and the sale of such products abroad. Testimony on these topics—limited to the Accused
`Products tested, developed, or manufactured in the United States for sale abroad—will also allow
`Plaintiffs to confirm whether the testing, development, and manufacturing of Accused Products
`sold abroad constitutes infringement under § 271(a).3
`
`Respectfully submitted,
`
`/s/ Brian E. Farnan
`
`Brian E. Farnan
`
`cc: Counsel of Record (Via E-Mail)
`
`3 Plaintiffs offered to forego a deposition on manufacturing topics if L’Oréal could stipulate that,
`for any product containing adenosine made in the United States, it does not topically apply the
`product to any mammal in manufacturing process, including in any quality control after the
`product is made but before the product is shipped. Exhibit R. L’Oréal refused to provide that
`stipulation. Id.
`
`