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`UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF COLUMBIA
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`IN RE PAPST LICENSING GMBH & CO.
`KG LITIGATION
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`This Document Relates To:
`Casio v. Papst, 06-1751
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`Misc. Action No. 07-493 (RMC);
`MDL Docket No. 1880
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`MEMORANDUM OPINION DENYING PAPST’S OBJECTIONS TO MAGISTRATE
`JUDGE’S MAY 31, 2007 ORDER
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`Papst Licensing GMBH & Co. KG (“Papst”) objects to the May 31, 2007 order of the
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`Magistrate Judge requiring Papst to respond to the initial discovery propounded by Casio America
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`Inc., formerly known as Casio, Inc., (“Casio USA”) — without objections concerning attorney client
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`privilege, consulting expert privilege, attorney work product protections, objections based on
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`confidentiality, and objections based on relevance — due to Papst’s failure to comply with the
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`district court’s order requiring Papst to respond to Casio USA’s initial discovery requests. As
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`explained below, the objections will be denied.
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`I. FACTS
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`Papst’s objections arise from the earlier stages of this case before it was approved as
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`Multi-District Litigation (“MDL”) and transferred to the undersigned. Casio USA filed its complaint
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`against Papst on October 16, 2007. Papst filed an answer and counterclaim, adding Casio Computer
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`Company, Ltd. (“Casio Japan”) as a defendant on January 2, 2007. The district court to whom the
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`Canon Exhibit 1202
`Page 1
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`LG Exhibit 1202, Page 1
`LG Electronics, Inc. v. Papst Licensing
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`Case 1:07-mc-00493-RMC Document 82 Filed 05/06/08 Page 2 of 10
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`case was assigned set an initial scheduling conference for February 1, 2007, and then postponed the
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`conference until March 20, 2007.
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`Under the Local Rules, parties are required to hold a Rule 26(f) conference twenty-
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`one days before the initial scheduling conference. See LCvR 16.2; see also Fed. R. Civ. P. 26(f).
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`The Local Rule provides that a party may move to extend the deadline for holding a Rule 26(f)
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`conference if a defendant has not been served or appeared in the case. Papst did not move to extend
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`the deadline for the Rule 26(f) conference despite the fact that it had not then served Casio Japan.
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`Counsel for Papst and counsel for Casio USA conducted a telephone conference on
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`March 2, 2007. Casio USA understood and intended this teleconference to be the Rule 26(f)
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`conference; all required topics were discussed. Papst takes the position that the March 2, 2007,
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`teleconference was not a proper Rule 26(f) conference because Papst had not yet served Casio Japan.
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`As a result, Casio Japan was not represented during the phone call.1
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`On March 6, 2007, Papst filed a motion to continue the initial scheduling conference.
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`Casio USA opposed the motion, challenging Papst’s statement that it would take up to four months
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`to serve Casio Japan under the Hague Convention, but also noting that if the Judge granted the
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`motion, Casio USA requested that discovery continue. Casio Am., Inc. v. Papst Licensing GMBH
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`& Co. KG, No. 06-1751, Casio’s Resp. Dkt. #13 at 2. Casio USA explained:
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`It is black letter law that once a 26(f) conference takes place,
`discovery can begin. This is applicable whether or not all parties
`have been served. Casio [USA] and Papst have had their Rule 26(f)
`conference, and pursuant to Rule 26, discovery should begin.
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`Id. Casio USA also explained that it already had served interrogatories and document requests on
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` Papst served Casio Japan through the Hague Convention on March 13, 2007. Thereafter,
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`counsel for Casio USA began joint representation of Casio USA and Casio Japan.
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`Canon Exhibit 1202
`Page 2
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`LG Exhibit 1202, Page 2
`LG Electronics, Inc. v. Papst Licensing
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`Case 1:07-mc-00493-RMC Document 82 Filed 05/06/08 Page 3 of 10
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`Papst on March 2, 2007, after it completed its Rule 26(f) conference with Papst. Id. at 3. In its
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`Reply, Papst first argued that the March 2, 2007 telephone call did “not satisfy Local Rule 16.3(a)
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`because not all Defendants participated.” See id., Papst’s Reply Dkt. #14 at 2. Second, Papst
`2
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`contended that “[p]roceeding with a discovery plan now, when Casio Japan has not yet been served
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`and counsel for Casio U.S. will not and apparently cannot speak for Casio U.S. [sic], will waste the
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`time and resources of the Court and parties.” Id. Papst’s third argument was that Casio U.S. was
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`“attempting to gain tactical advantage in discovery by claiming to have conducted a good faith Rule
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`26(f) conference on March 2, and immediately thereafter serving written discovery on Papst
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`Licensing, when the phone call was missing the critical Defendant’s counsel.” Id.
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`With this completely briefed argument before it, in a Minute Entry Order dated March
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`13, 2007, the Court entered its “Order granting the Motions to Continue; the Initial Scheduling
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`Conference is hereby continued until May 14, 2007, at 10:15 a.m.; no further continuances will be
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`granted; discovery between Plaintiff and Defendant is to proceed.” Casio Am., Inc. v. Papst
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`Licensing GMBH & Co. KG, No. 06-1751, Minute Order filed Mar. 13, 2007 (emphasis added).
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`Papst alleges that it believed that the court’s order that discovery was “to proceed”
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`meant that all three parties, Casio USA, Casio Japan, and Papst, should proceed with a Rule 26(f)
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`conference before Papst was required to respond to the Casio USA interrogatories and document
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`requests. Casio USA understood the Minute Order to mean that the time for response to its
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` Papst particularly complained that “[e]ven simple questions such as Casio Japan’s
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`electronic data and e-mail systems went unanswered.” Id. This Court has subsequently stricken all
`of Papst’s initial discovery requests to Casio USA as overbroad, unduly burdensome, not likely to
`lead to the discovery of relevant evidence, and propounded in bad faith, including its highly complex
`“simple questions” concerning information technology for each and every Casio company around
`the world. See First Order Regarding Casio/Papst Discovery Dkt. #77.
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`Canon Exhibit 1202
`Page 3
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`LG Exhibit 1202, Page 3
`LG Electronics, Inc. v. Papst Licensing
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`Case 1:07-mc-00493-RMC Document 82 Filed 05/06/08 Page 4 of 10
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`discovery requests began to run on March 2 when Casio USA served them upon Papst and that
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`Papst’s responses therefore were due on April 2, 2007. As is clear from its own argument to the
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`Court, counsel for Papst acknowledged that they had received the Casio USA discovery requests on
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`March 2, 2007. Despite the direct Order of the Court, and its clear knowledge of the outstanding
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`discovery, Papst failed to respond by April 2.
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`On April 20, 2007, Casio USA moved to compel responses, and Papst opposed. The
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`district court referred the motion to compel to the Magistrate Judge. The Magistrate Judge heard oral
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`argument on May 31, 2007, and granted Casio USA’s motion to compel from the bench, noting:
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`[T]he court reviewed the motion, the opposition and the reply . . . .
`Having done so, the Court will grant the motion, largely for the
`reasons offered by the Movant, both orally and in writing.
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`More specifically, the Court finds that what Papst urges upon the
`Court is a novel way of counting the number of days in which a party
`must serve responses to written discovery requests. The Court uses
`the term, quote, “novel,” close quote, because there is simply no
`authority which supports this method of calculating the deadline.
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`The rules make plain when it is that a party is to serve responses to
`written discovery requests. There was no motion for enlargement of
`time filed by Papst. Papst did not seek any clarification of the due
`date in the meet and confer report that counsel, along with opposing
`counsel, filed in this matter, and appears to have unilaterally taken the
`position that because Papst was displeased with the manner in which
`the Rule 26(f) meeting or conference was conducted that the
`responses to the written discovery requests would be withheld.
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`Tr. of May 31,2007 hearing at 25. She ordered “that complete responses — that is without
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`objections, which have been waived by the failure to respond in a timely fashion — be served within
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`10 calendar days of today’s date.” Id. at 27 (emphasis added). As a sanction, the Magistrate Judge
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`also imposed on Papst the costs to Casio USA, including reasonable attorney’s fees, of moving to
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`Canon Exhibit 1202
`Page 4
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`LG Exhibit 1202, Page 4
`LG Electronics, Inc. v. Papst Licensing
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`Case 1:07-mc-00493-RMC Document 82 Filed 05/06/08 Page 5 of 10
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`compel. Id.
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`On June 6, 2007, Papst filed a Request for Clarification, seeking clarification whether
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`Papst was deemed to have waived the attorney client privilege, consulting expert privilege, attorney
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`work product protections, objections based on confidentiality, and objections based on relevance.
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`Casio, No. 06-1751, Dkt. #35. On June 7, 2007, Casio USA filed a response maintaining that all
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`privileges had been waived, but agreeing to maintain the confidentiality of documents produced. Id.,
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`Dkt. #37. On June 27, 2007, the Magistrate Judge summarily denied the Request for Clarification
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`“for the reasons offered by [Casio].” Id., June 27, 2007 Minute Order.
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`Prior to the Magistrate Judge’s ruling on June 27, Papst had timely filed before the
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`district court its objections to and motion to reconsider the Magistrate Judge’s May 31, 2007 order.
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`Casio, No. 06-1751, Dkt. #43, filed 6/14/07. Papst refiled that same motion, without change or
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`update, in this MDL. See Papst’s Objections to and Mot. to Reconsider the Magistrate Judge’s May
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`31, 2007 Order Dkt. #43. Casio USA then responded. See Casio’s Resp. Dkt.#49. Papst replied,
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`see Papst’s Reply Dkt. #44, and Casio USA supplemented its response, see Casio’s Supp. Resp. Dkt.
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`#63.
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`II. LEGAL STANDARDS
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`Papst objects to the Magistrate Judge’s Order under Local Civil Rule 72.2(b). Papst’s
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`Objections Dkt. #43 at 1 (citing LCvR 72.2(b) (“any party may file written objections to a magistrate
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`judge's ruling . . . within 10 days after being served with the order”)). Under Local Rule 72.2(c),
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`“Upon consideration of objections filed in accordance with this Rule, a district judge may modify
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`or set aside any portion of a magistrate judge's order under this Rule found to be clearly erroneous
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`or contrary to law.” LCvR 72.2(c) (emphasis added). The comment to Rule 72.2 indicates, “The
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`Canon Exhibit 1202
`Page 5
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`LG Exhibit 1202, Page 5
`LG Electronics, Inc. v. Papst Licensing
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`Case 1:07-mc-00493-RMC Document 82 Filed 05/06/08 Page 6 of 10
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`Rule is intended to make clear that objections to the Magistrate Judge’s proposed findings and
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`recommendations should not be called motions for reconsideration and are to be directed to the
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`district judge.” Thus, even though Papst titled its motion as “objections to and motion to
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`reconsider,” the Court treats the pleading as objections to the Magistrate Judge’s order and not as
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`a motion to reconsider.
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`III. ANALYSIS
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`Before addressing the merits of the parties’ positions, the Court describes the nature
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`of the parties and this litigation to put this matter in context. Casio USA sells digital cameras in the
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`United States. Papst is a German company that produces no products; it acquires patents on products
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`or methods allegedly invented by others and then searches the world for patents it might challenge
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`for infringement. At one of the first status conferences of the MDL, when the Court queried whether
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`this was old-fashioned “claim-jumping,” counsel for Papst readily agreed that it had been called
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`worse. Of course, this is a perfectly lawful and respectable business. But it underscores that the
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`business of Papst is litigation, not invention or production. Litigation is the business model whereby
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`Papst, when successful, achieves royalty payments from others. As is clear from this record, the
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`threat of litigation alone often achieves royalty payments. Papst is not represented by counsel from
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`Germany who may be unfamiliar with the federal rules. Its U.S. counsel are from Chicago and
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`regularly represent Papst in patent litigation across the country. These counsel are highly
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`experienced in U.S. patent law and in district court litigation.
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`With these considerations in mind, we turn to the instant matter. Papst objects to the
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`Magistrate Judge’s ruling that it waived all objections based on attorney client privilege, consulting
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`expert privilege, protection under the work product doctrine, and relevance and that Papst is liable
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`-6-
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`Canon Exhibit 1202
`Page 6
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`LG Exhibit 1202, Page 6
`LG Electronics, Inc. v. Papst Licensing
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`Case 1:07-mc-00493-RMC Document 82 Filed 05/06/08 Page 7 of 10
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`for monetary damages. Papst asserts that waiver is too harsh because Papst’s conduct grew out of
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`a misunderstanding of the court order for discovery “to proceed.”
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`This claim of “misunderstanding” cannot be credited. Casio USA had indicated
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`specifically that it would not object to rescheduling the initial scheduling conference as long as
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`discovery were not delayed, that Papst and Casio USA had held a Rule 26(f) conference, that Casio
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`USA had served discovery requests on Papst, and that discovery between Casio USA and Papst
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`should be allowed to proceed. Papst did not contest that the parties had had a teleconference that
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`covered all subjects required by Rule 26(f) and acknowledged that it had received Casio USA’s
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`discovery requests on March 2, 2007; instead, it challenged the sufficiency of the teleconference;
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`argued that time would be wasted by discovery against Casio USA without Casio Japan in the suit;
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`and claimed that Casio USA was merely seeking strategic advantage. The district court granted
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`Papst’s motion to continue the initial scheduling conference to allow Papst time to serve Casio
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`Japan. But the Court also ordered, succinctly and precisely, that “discovery between Plaintiff and
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`Defendant is to proceed.” When the Court ordered discovery “to proceed,” it was clearly ruling on
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`that aspect of the motion in Casio’s favor and rejecting Papst’s arguments. The time for serving
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`responses to written discovery requests was clear under the rules, but Papst never filed a motion for
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`an enlargement of time. In briefing here, Counsel for Papst do not address their failure to seek an
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`enlargement. Nor did Papst seek clarification of the deadline for its discovery responses in the meet
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`and confer report or in any other pleading. Counsel for Papst do not address their failure to seek any
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`clarification of the deadline for its discovery responses. In the face of a direct Order of the Court,
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`Papst simply withheld its responses.
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`Papst argues that the sanction of waiver of privileges is unduly harsh. “As a general
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`Canon Exhibit 1202
`Page 7
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`LG Exhibit 1202, Page 7
`LG Electronics, Inc. v. Papst Licensing
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`Case 1:07-mc-00493-RMC Document 82 Filed 05/06/08 Page 8 of 10
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`rule, when a party fails to object timely to discovery requests, such objections are waived.” See, e.g.,
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`United Steelworkers of Am., AFL-CIO v. IVACO, Inc., 2003 U.S. Dist. LEXIS 10008, at *13 (N.D.
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`Ga. Jan. 13, 2002); Marx v. Kelly, Hart & Hallman, P.C., 929 F.2d 8, 12 (1st Cir. 1991); In re
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`United States, 864 F.2d 1153, 1156 (5th Cir. 1989). However, “waiver of privilege is a serious
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`sanction most suitable for cases of unjustified delay, inexcusable conduct, and bad faith.” United
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`States v. British Am. Tobacco, 387 F.3d 884, 891 (D.C. Cir. 2004). “[M]inor procedural violations,
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`good faith attempts at compliance, and other mitigating circumstances will militate against finding
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`waiver.” United Steelworkers of Am., 2003 U.S. Dist. LEXIS10008, at *13.
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`The Court finds that waiver of privileges is not too harsh a sanction under the
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`circumstances presented here. Papst’s failure to respond to Casio USA’s discovery requests, as
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`directly ordered, was entirely unjustified and inexcusable and smacks of bad faith. How difficult is
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`it to understand a district court order that discovery is “to proceed”? Were there any doubt, Papst
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`might have inquired. It did nothing. It merely delayed — a delay that continues, in part, to this day.3
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`It may be a successful business model, when the “business” of a business is litigation, to interpose
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`delay at any possible opportunity. Delay costs money to opponents and may, in the end, cause an
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`opponent to settle a case. Ultimately, Papst offers no good reason why its experienced counsel
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`should be allowed, without sanction, to ignore totally a court order on which they had been heard
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`fully.
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`Accordingly, Papst is required to respond to Casio USA’s initial discovery requests
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`without objection based on attorney client privilege, consulting expert privilege, or attorney work
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` As of April 24, 2008, Papst still had not responded sufficiently to Casio’s discovery
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`requests. See First Order Regarding Casio/Papst Discovery Dkt. #77 (ordering Papst to respond to
`Casio’s interrogatories). Thus, the delay in question was not a matter of weeks, but more than a year.
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`Canon Exhibit 1202
`Page 8
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`LG Exhibit 1202, Page 8
`LG Electronics, Inc. v. Papst Licensing
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`Case 1:07-mc-00493-RMC Document 82 Filed 05/06/08 Page 9 of 10
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`product. Casio has agreed, and there is now a Protective Order entered by the Court, that will shield
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`Papst’s confidential documents from public display.
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`Papst further points out that is it not clear whether the Magistrate Judge ordered
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`objections as to relevance be waived. She ordered “that complete responses — that is without
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`objections, which have been waived by the failure to respond in a timely fashion — be served within
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`10 calendar days of today’s date.” Tr. of May 31, 2007 hearing at 27. The Magistrate Judge did not
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`order that relevance objections be waived because “concluding that [irrelevance] is invariably
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`waived whenever it is not timely asserted would lead to absurd results.” Byrd v. Reno, No. 96-2375,
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`1998 U.S. Dist. Lexis 11855, at *15 (D.D.C. Feb. 12, 1998).
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`[P]arties in discovery hardly need an inducement to ask the most
`outrageous questions possible in the hope than an untimely response
`would permit them to get indirectly what they knew they could not
`get directly. Accepting the proposition that a federal court must order
`an interrogatory answered no matter how irrelevant the information
`it seeks mocks the true purpose of the Federal Rules of Civil
`Procedure as stated in Rule 1 that the rules be “construed and
`administered
`to secure
`the
`just, speedy, and
`inexpensive
`determination of every action.”
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`Id. Because waiver of a relevance objection would lead to absurd results, the Court finds that the
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`Magistrate Judge could not have so intended. Accordingly, relevance objections have not been
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`waived.
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`Finally, Papst argues that the sanction requiring it to pay Casio USA’s costs and
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`attorney’s fees is unjust. Again, Papst contends that it was merely mistaken regarding its
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`interpretation of the district court’s order for discovery “to proceed.” As explained above, this
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`contention by Papst’s experienced counsel is not credible. The sanction shall remain in place.
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`Canon Exhibit 1202
`Page 9
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`LG Exhibit 1202, Page 9
`LG Electronics, Inc. v. Papst Licensing
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`Case 1:07-mc-00493-RMC Document 82 Filed 05/06/08 Page 10 of 10
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`IV. CONCLUSION
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`For the foregoing reasons, the Court finds that the May 31, 2007 order of the
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`Magistrate Judge was not clearly erroneous or contrary to law. The Court will deny Papst’s
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`Objections to and Motion to Reconsider Portions of Magistrate Judge Robinson’s May 31, 2007
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`Order [Dkt. #43]. The Magistrate Judge’s May 31, 2007 order in the underlying case, No. 06-1751,
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`will be affirmed. A memorializing order accompanies this Memorandum Opinion.
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`Dated: May 6, 2008
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` /s/
`ROSEMARY M. COLLYER
`United States District Judge
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`Canon Exhibit 1202
`Page 10
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`LG Exhibit 1202, Page 10
`LG Electronics, Inc. v. Papst Licensing
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