Case 2:17-cv-00140-WCB-RSP Document 250 Filed 11/07/18 Page 1 of 15 PageID #: 11206
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
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`Case No. 2:17-CV-140-WCB
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`§§§§§§§§§§§
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`CYWEE GROUP LTD.,
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`Plaintiff,
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`v.
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`SAMSUNG ELECTRONICS CO. LTD. and
`SAMSUNG ELECTRONICS AMERICA,
`INC.,
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`Defendants.
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`MEMORANDUM OPINION AND ORDER
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`Before the Court are Plaintiff’s Motion for Leave to Supplement Expert Reports to Include
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`Third-Party Discovery, Dkt. No. 176, and Defendants’ Motion to Strike Plaintiff’s Untimely
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`Supplemental Infringement Charts, Dkt. No. 187. On October 24, 2018, the Court held a hearing
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`on various motions in this case, including the two motions referenced above. After considering the
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`arguments made in the parties’ briefs and during the hearing, the Court GRANTED Plaintiff’s
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`Motion for Leave to Supplement Expert Reports to Include Third-Party Discovery and DENIED
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`Defendants’ Motion to Strike Plaintiff’s Untimely Supplemental Infringement Charts. The Court
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`ruled on the motions in open court and noted the decisions in a minute order issued on October 26,
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`2018. Dkt. No. 238, at 2. This memorandum opinion and order details the reasons for the Court’s
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`rulings on those two motions.
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`I. Governing Legal Principles
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`Although the procedural posture of the two motions and the background facts pertinent to
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`each are somewhat different, the issues are similar. In the motion filed by the defendants
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`(“Samsung”), the issue is whether the Court should permit the plaintiff (“CyWee”) to amend its
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`Case 2:17-cv-00140-WCB-RSP Document 250 Filed 11/07/18 Page 2 of 15 PageID #: 11207
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`infringement contentions after the deadline for serving infringement contentions has passed.
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`Samsung’s motion is addressed to CyWee’s effort to amend its infringement contentions to add a
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`theory that some of the accused devices use a Samsung algorithm to implement their sensor fusion
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`functionality, rather than an Android algorithm, as CyWee had initially contended.
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`In the motion filed by CyWee, the issue is whether the Court should grant a two-week
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`extension of the period for filing expert reports. The necessary effect of granting CyWee’s motion,
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`however, would be to allow CyWee to pursue a theory of infringement that was not in its initial
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`infringement contentions—the theory that some of the accused devices use a Qualcomm algorithm
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`to implement their sensor fusion functionality, rather than an Android algorithm, as CyWee
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`initially contended in its infringement contentions. Because permitting the filing of expert reports
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`incorporating a new theory of infringement would require the service of new infringement
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`contentions, the Court treats CyWee’s motion as addressing both the date for serving its expert
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`reports and the deadline for serving amended infringement contentions.
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`The Discovery Order entered in this case provided that the plaintiff need not comply with
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`the requirement in the local rules to file infringement contentions for claim elements reciting a
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`software limitation “until 30 days after the source code for each Accused Instrumentality is
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`produced by the opposing party.” Dkt. No. 35, at 2. The parties dispute when the source codes
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`for the various accused products in this case were produced. Samsung argues that the source
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`code for the Samsung-algorithm products was produced as early as March 23, 2018, and the
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`source code for the Qualcomm-algorithm products was made available as of July 25, 2018.
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`Under Samsung’s theory, because the amended infringement contentions were not served within
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`30 days of those dates, the amended infringement contentions are untimely, and the extension of
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`time for filing expert reports should not be granted. CyWee contends that the source code for the
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`Samsung-algorithm code was not produced for inspection until August 14, 2018, and that the
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`amended infringement contentions, which were served on September 10, 2018, were therefore
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`timely. Even if a fully searchable version of Samsung-algorithm code is regarded as having been
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`produced as early as July 30, 2018, CyWee contends that the period of delay is short and
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`excusable in light of the need to confirm whether the proper files were included in the source
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`code that was being produced. As for the Qualcomm-algorithm source code, CyWee contends
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`that while Qualcomm produced the relevant source code on July 25, 2018, CyWee required a
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`deposition of a Qualcomm representative to facilitate the efficient production and identification
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`of relevant information. Given that the only date available for the deposition was October 2,
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`2018, the request for an extension of time for filing expert reports (and the accompanying request
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`for leave to file infringement contentions reflecting the contents of the expert report) should be
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`granted.
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`Courts in this district apply a non-exclusive list of factors when considering whether to
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`grant leave of court permitting a party to amend its infringement or invalidity contentions after
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`the deadline for serving those contentions has passed. Those factors are: (1) the length of the
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`delay and its potential impact on the judicial proceedings; (2) the reason for the delay, including
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`whether it was within the reasonable control of the movant; (3) whether the offending party was
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`diligent in seeking an extension of time, or in supplementing discovery, after an alleged need to
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`disclose the new matter became apparent; (4) the importance of the particular matter, and if vital
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`to the case, whether a lesser sanction would adequately address the other factors to be considered
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`and also deter future violations of the court’s scheduling orders, local rules, and the federal rules
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`of procedure; and (5) the danger of unfair prejudice to the non-movant. See Sycamore IP
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`Holdings LLC v. AT&T Corp., No. 2:16-cv-588, 2017 WL 4517953, at *2 (E.D. Tex. Oct. 10,
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`2017); Allure Energy, Inc. v. Nest Labs, Inc., 84 F. Supp. 3d 538, 540–41 (E.D. Tex. 2015); Tyco
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`Healthcare Grp. LP v. Applied Med. Res. Corp., No. 9:06-cv-151, 2009 WL 5842062, at *2
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`(E.D. Tex. Mar. 30, 2009); Computer Acceleration Corp. v. Microsoft Corp., 481 F. Supp. 2d
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`620, 625 (E.D. Tex. 2007); see also Tech Pharmacy Servs., LLC v. Alixa Rx LLC, No. 4:15-cv-
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`766, 2017 WL 3283325, at *2 (E.D. Tex. Aug. 2, 2017) (same principles applicable to whether
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`to strike or permit amendment of invalidity contentions); Anascape, Ltd. v. Microsoft Corp., No.
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`9:06-cv-158, 2008 WL 7180756, at *2-3 (E.D. Tex. May 1, 2008) (same). With respect to the
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`issue of diligence, the burden of proof is on the party seeking leave to establish diligence, rather
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`than on the opposing party to establish lack of diligence. O2 Micro Int’l Ltd. v. Monolithic
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`Power Sys., Inc., 467 F.3d 1355, 1366 (Fed. Cir. 2006).
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`After carefully considering the circumstances leading to the dispute over CyWee’s
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`amendment of its infringement contentions and the request for an extension of the date for filing
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`expert reports, the Court makes the following findings:
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`1. With respect to the Samsung-algorithm products, given the considerable confusion over
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`the production of the pertinent source code, CyWee was justified in concluding that it
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`was not until Samsung’s offer to produce its source code as of July 30, 2018, at the
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`earliest, that the 30-day period for amending its infringement contentions began to run.
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`Thus, the filing of the infringement contentions with respect to the Samsung-algorithm
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`products, which occurred on September 10, 2018, was at most delayed 12 days.
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`2. With respect to the Qualcomm-algorithm products, the source code was produced on July
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`25, 2018. Accordingly, any delay in amending the infringement contentions with regard
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`to the Qualcomm algorithm products was, at most, 39 days. However, the Court
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`acknowledges CyWee’s representation that without a deposition of a Qualcomm
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`representative, CyWee was unable to identify relevant information in the source code
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`until October 2, 2018.
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`3. The short periods of delay at issue in this case have had no material impact on the judicial
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`proceedings, as a date for trial has not yet been set and other deadlines have not been
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`adversely affected by the delay.
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`4. The background circumstances that led to the delay in amending the infringement
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`contentions are attributable to CyWee’s lack of information—or at least its lack of
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`recognition—that some of the accused devices were using a Qualcomm algorithm for
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`their sensor fusion technology and that others were using a Samsung algorithm, which
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`was contrary to CyWee’s prior understanding. Whether that misunderstanding was
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`chargeable to CyWee and thus the long period between the service of CyWee’s initial
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`infringement contentions and the service of its amended infringement contentions was
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`under the reasonable control of CyWee is a difficult issue. The Court has resolved that
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`issue by determining that CyWee’s misunderstanding was reasonable and that the delay
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`was therefore not reasonably chargeable to CyWee.
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`5. While CyWee delayed for a period of time in seeking access to Qualcomm and
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`Samsung’s source code, that delay was not the result of unreasonable lack of diligence.
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`Once the need to amend the infringement contentions became clear, CyWee was diligent
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`in conducting the discovery that ultimately led to CyWee’s amending its contentions,
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`even though that process took several months to complete.
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`6. The amendment of the infringement contentions is important to the case, as it appears
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`that the effect of denying an amendment would be that CyWee’s claims as to the devices
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`using the Qualcomm and Samsung algorithms would fail, at least in this proceeding, or
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`would be significantly compromised.
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`7. The prejudice to Samsung resulting from the delays is minimal. While amending its
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`infringement contentions allows CyWee to proceed on portions of the case that might
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`otherwise be barred, the loss of an opportunity to benefit from that windfall does not
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`constitute prejudice to Samsung. The only prejudice to Samsung that the Court can
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`perceive is the burden of supplementing its expert report on infringement to address the
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`Qualcomm- and Samsung-algorithm theories of infringement. The Court does not regard
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`that burden as constituting severe or unfair prejudice, as Samsung has long understood
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`that its products contain code from those sources and has understood for months that
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`CyWee has been seeking the discovery needed to prove its case as to those products.
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`II. Factual Background
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`To assess the reasons for the various delays in the discovery process and to assess CyWee’s
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`diligence during that period, it is necessary to examine the timeline of the discovery proceedings in
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`some detail.
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`CyWee offered evidence that it conducted negotiations with Samsung for a period of about
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`six months before filing suit. During those pre-suit negotiations, CyWee presented Samsung with
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`claim charts showing why CyWee believed that Samsung’s products infringed the patents-in-suit.
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`CyWee’s presentations, according to its evidence, cited Samsung’s use of Android sensor fusion
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`code in the products at issue. In response to those claim charts, Samsung did not deny that its
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`products used Android sensor fusion code, nor did Samsung state that it used some code other than
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`Android sensor fusion code. Dkt. No. 206-1, at ¶¶ 2-4. Samsung has offered no contrary evidence
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`on that point.
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`After suit was filed, CyWee served its initial infringement contentions on July 12, 2017,
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`accusing 15 Samsung products of infringement. CyWee subsequently served amended
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`infringement contentions that added three new products. After Samsung moved to strike the
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`amended infringement contentions as untimely, Dkt. No. 41, CyWee moved for leave to amend its
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`infringement contentions, Dkt. No. 44. The Court granted the motion for leave to amend and
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`denied the motion to strike. Dkt. Nos. 58 and 63.
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`Samsung made its initial discovery disclosures in August 2017. Those disclosures listed
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`individuals at various companies that were identified as “[t]hird-party provider[s] of accused
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`hardware and software components,” and that those individuals were “[k]nowledgeable about
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`sensors and sensor fusion algorithms used in accused products.” Dkt. No. 215-2, at 7-8. In
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`October 2017, Samsung responded to one of CyWee’s interrogatories (interrogatory no. 21) by
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`stating that the “algorithm processing chip” for several of the accused devices was manufactured
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`by other companies, including Broadcom and Qualcomm. Dkt. No. 176-3, at 42.
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`In January 2018, CyWee requested various items of discovery from Samsung, including all
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`source code documentation for the accused products “related to the functionality accused in
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`CyWee’s infringement contentions in this case.” Dkt. No. 160-2, at 4. On March 9, 2018, CyWee
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`followed up with a further request (apparently an oral request) that Samsung make its source code
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`available for inspection. Dkt. No. 187-1, ¶ 7; Dkt. No. 187-10, at 1.
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`Samsung replied to that request by stating that the source code for its accused products
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`would be made available for inspection in its offices in Atlanta starting on March 23, 2018. Dkt.
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`No. 187-10, at 1. At that time, along with a considerable volume of other discovery materials,
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`Samsung produced a spreadsheet that listed, among other information, the “sensor fusion
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`algorithm” for various Samsung products. The column headed “sensor fusion algorithm”
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`contained various entries, including listing “Qualcomm” for certain products and listing “SEC
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`[Samsung Electronics Company]” for others. Dkt. No. 197-2.
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`CyWee advised Samsung that its expert would be available to examine the source code on
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`May 8 and 9, 2018. At that time, a team from CyWee traveled to Atlanta to begin examining the
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`source code. They had difficulties in doing so, however. According to CyWee (and unrebutted by
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`Samsung), only a small portion of the source code for only a small subset of the accused products
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`was made available at that time. When Samsung provided more code the next day, CyWee’s team
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`discovered that the code was stored on an external drive that was not indexed, frequently locked up
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`during review, and could not be searched to determine where the functions related to sensor fusion
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`were located. Dkt. No. 206-2, at ¶¶ 6-7, 12.
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`Over the next several days, the parties negotiated over the production of Samsung’s source
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`code material. On May 11, Samsung stated that CyWee “should have been aware that much of the
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`relevant source code would be with third parties,” because Samsung’s discovery responses
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`“provid[ed] more than adequate information for CyWee to have discerned that many of the
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`accused products use a third-party algorithm processing chip and a third-party algorithm.” Dkt.
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`No. 176-5, at 8-9. In support of that contention, Samsung pointed to its initial disclosures in
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`August 2017 and its response to interrogatory no. 21 submitted in October 2017. CyWee disputed
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`that the August disclosures or the October interrogatory response had put CyWee on notice that the
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`algorithms in many of Samsung’s accused products were produced by others and that the code was
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`not in Samsung’s possession. Id. at 7-8.
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`On May 15, Samsung disclosed that the third parties in question had never provided
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`Samsung with the relevant source code and that Samsung did not have possession of the third-party
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`source code that CyWee was seeking. Samsung advised CyWee that in order to obtain that code
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`CyWee would have to seek it through discovery directed to the third parties. Id. at 7. On May 17,
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`2018, Samsung offered to request that the third parties provide their source code to CyWee;
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`Samsung made such a request to Qualcomm by letter, but Qualcomm did not respond to
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`Samsung’s letter, and CyWee was unable to obtain access to the Qualcomm source code at that
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`time.
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`On May 21, CyWee emailed Samsung, raising multiple questions regarding the review of
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`Samsung’s source code, including the sensor fusion code. Dkt. No. 206-16. On June 5, Samsung
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`responded to CyWee’s May 21 inquiry. With regard to the request that Samsung confirm that the
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`Android sensor fusion code was the same as the code Samsung had already produced, Samsung
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`replied that the Android sensor fusion code is not used in Samsung products. Dkt. No. 206-16, at
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`23. CyWee responded by insisting that Samsung could not deny that the Android sensor fusion
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`algorithm was included on some of the accused devices, since Samsung had previously produced
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`that code in response to a discovery request. Id.
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`During June 2018, the parties exchanged emails regarding the production of the pertinent
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`source code. CyWee noted that some of the information it had received from Samsung had been
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`inconsistent, and it requested that Samsung clarify its responses on those points. Samsung
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`responded that CyWee’s continuing requests for access to the pertinent source code were “both
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`expansive and vague.” Dkt. No. 176-4, at 20-23.
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`In response to CyWee’s further objections to the state of Samsung’s production, Samsung
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`on July 2, 2018, explained that it had provided CyWee with a complete copy of the two versions of
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`its internally developed sensor fusion algorithms. Samsung explained that the Android algorithms
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`“are not used in any of the accused products (they are ‘dead’ or inactive code).” Dkt. No. 176-4, at
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`19.
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`CyWee responded the next day that Samsung had not produced the code that replaced the
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`functions of the “dead” Android code or the names of the applications containing that code.
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`CyWee also requested that Samsung’s Rule 30(b)(6) witnesses be prepared to testify about
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`Samsung’s in-house applications that purportedly performed the sensor fusion function and about
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`Samsung’s allegation that the Android code on its accused products was “dead.” Id. at 18-19.
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`Samsung responded that its witnesses would be prepared to address those questions in their
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`depositions scheduled for late July and early August in Korea.
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`On July 3, Samsung proposed to make available for CyWee’s inspection the source code
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`for various products that used the internally developed Samsung sensor fusion algorithm.
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`Samsung offered to provide that material for inspection in local counsel’s offices in Tyler, Texas.
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`Dkt. No. 187-14.
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`Beginning on July 26, CyWee took the deposition of Dr. Gongbo Moon, Samsung’s
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`corporate representative on topics related to the sensor fusion algorithms used in the accused
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`products. Dr. Moon testified that the source code in each accused product was modified to
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`circumvent the Android sensor fusion code in favor of Samsung’s own algorithm or a third-party
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`algorithm. Dkt. No. 206-14. During the deposition period, on July 30, Samsung advised CyWee
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`that as of that date a fully searchable version of the source code for the devices using the Samsung
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`sensor fusion technology was available for inspection in Tyler, Texas. Dkt. No. 187-15.
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`Based on Dr. Moon’s deposition, on July 31, CyWee requested assurances from Samsung
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`that certain specific source code was produced. The requested source code included files for
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`Samsung’s “SensorService.cpp,” the file that, according to Dr. Moon, had been modified to run
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`Samsung’s own sensor fusion algorithm or a third-party algorithm, rather than the standard
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`Android code. Dkt. No. 206-15; Dkt. No. 206-14 (65:11-18).
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`On August 10, Samsung confirmed that the requested source code, including the specific
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`files requested by CyWee, would be available for review. On August 14 and 15, CyWee inspected
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`that source code. Twenty-seven days later, CyWee served supplemental infringement contentions,
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`in the form of claim charts, for three of Samsung’s accused products. Dkt. No. 187, at 4.
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`In the meantime, with respect to CyWee’s efforts to obtain source code relating to the
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`Qualcomm sensor fusion algorithm, Qualcomm failed to respond to Samsung’s request that it
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`produce its source code to CyWee. Accordingly, on May 31, 2018, CyWee subpoenaed
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`Qualcomm for that material. On June 15, 2018, both Qualcomm and Samsung filed objections to
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`the subpoena. The parties then engaged in negotiations over the subpoena.
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`After extended negotiations, Qualcomm produced source code on July 25, which CyWee’s
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`expert reviewed on August 6. However, CyWee subsequently advised Qualcomm that its expert
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`had not been able to locate key operations within the source code. Dkt. No. 176-17. When
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`Qualcomm responded on August 17 that it was not willing to volunteer any more information
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`about the source code, CyWee promptly served Qualcomm with a deposition subpoena. Id.
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`Qualcomm initially objected to the deposition subpoena, but ultimately agreed to submit to a
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`deposition. Because Qualcomm’s expert was not available until October 2, the deposition was
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`scheduled for that day. It was at that point that CyWee moved for leave to file a supplement to its
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`expert report in order to incorporate the information regarding the Qualcomm sensor fusion
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`algorithm. Dkt. No. 176.
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`III. Discussion
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`Of the non-exclusive list of factors the courts in this district consider when determining
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`whether to grant leave of court permitting a party to amend its infringement or invalidity
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`contentions after the deadline for serving those contentions has passed, this Court finds two
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`factors critical to the disposition of these motions: whether there was a good reason for CyWee’s
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`delay in amending its infringement contentions and whether CyWee showed reasonable diligence
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`once the need to amend its contentions became apparent.1 Based on the timeline of events and the
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`findings supported by the evidence proffered by the parties, the Court draws the following
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`conclusions:
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`First, although CyWee could have sought to review the Samsung source code at the outset
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`of the case, or after the initial disclosures in August 2017, the delay in requesting access to the
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`source code until January 2018 was not unreasonable. That is so particularly in light of CyWee’s
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`belief (not corrected by Samsung at any point during the pre-suit negotiations) that all of
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`Samsung’s devices ran the Android sensor fusion code.
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`Second, the delay between the time that Samsung made the source code available as of
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`March 23, 2018, and the time when CyWee’s team traveled to Atlanta to examine the code was not
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`unreasonable, particularly given the limited availability of CyWee’s expert.
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`Third, the effort to examine the code in Atlanta was unsuccessful; while it is not entirely
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`clear why that effort did not succeed, CyWee’s account is that the code was largely inaccessible,
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`incomplete, and not indexed, and Samsung has not specifically rebutted that contention. The Court
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`therefore concludes that it was not unreasonable for CyWee to attempt to obtain access to
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`Samsung’s source code in other ways.
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`Fourth, the facts relating to Qualcomm do not suggest a lack of diligence on CyWee’s part.
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`When CyWee discovered that Qualcomm was involved with the sensor fusion technology in
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`Samsung’s devices, CyWee requested assistance from Samsung in obtaining Qualcomm’s source
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`code for that functionality. Samsung wrote a letter to Qualcomm requesting its cooperation, but
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`1 As noted above, the other factors (i.e., length of delay, importance of the matter, and
`danger of unfair prejudice) all clearly point in favor of CyWee.
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`that was the limit of Samsung’s cooperation in obtaining Qualcomm’s assistance. Moreover, when
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`CyWee served a subpoena on Qualcomm for the information, Samsung impeded CyWee’s
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`discovery effort by objecting to the subpoena. Obtaining information from Qualcomm turned out
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`to be a slow process, a fact that cannot be laid at CyWee’s doorstep. Although CyWee actively
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`sought Qualcomm’s cooperation as early as June 2018, Qualcomm did not produce its source code
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`until the end of July. And even then, CyWee needed information from a knowledgeable
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`Qualcomm witness to understand the functioning of the source code, and Qualcomm did not make
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`that witness available until October 2, 2018. Under these circumstances, the Court finds nothing to
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`fault in CyWee’s conduct with regard to the Qualcomm discovery, at least once CyWee focused on
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`the fact that some of the devices used a Qualcomm algorithm to perform the sensor fusion
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`functions rather than the Android algorithm.
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`Fifth, with respect to those devices that used Samsung’s own code, there were various
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`indications from Samsung, beginning with the March 23, 2018, spreadsheet and continuing into
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`May and June of 2018, that the Android code was not the operative code in Samsung’s devices.2
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`CyWee might well have garnered from those disclosures that Samsung was not using the Android
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`code as the basis for its sensor fusion technology. However, perhaps because it was confused by
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`the fact that the Samsung products still contained the Android code, CyWee did not recognize at
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`that time that the Android code was irrelevant to the sensor fusion function in Samsung’s products.
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`Therefore, it was not clear to CyWee until July 2, 2018, that the Android code in those devices was
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`“dead.” At that point, CyWee sought to obtain access to pertinent portions of Samsung’s internally
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`developed code, and access was ultimately promised on July 30, 2018. After obtaining
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`2 The Court does not regard the August 2017 initial disclosures or the October 2017
`interrogatory as being sufficiently specific to put CyWee on notice that the Android algorithm
`was not used in Samsung’s accused products.
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`confirmation by August 10 that the Samsung code contained all the elements CyWee was seeking,
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`CyWee promptly reviewed that code on August 14 and 15. The amended infringement contentions
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`with regard to the Samsung-algorithm products were served 27 days later. During that period,
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`CyWee cannot fairly be charged with failing to act promptly to obtain the information it needed.
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`In sum, the picture that emerges from the evidence presented to the Court is that CyWee,
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`while not always as prompt in seeking materials or recognizing blind alleys as it could have been,
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`was reasonably diligent in seeking the pertinent source code throughout the discovery period in
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`light of the difficulties it encountered. While CyWee might have deduced from communications
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`along the way that Samsung’s devices used algorithms other than the Android algorithm, it was not
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`until July 2018 that Samsung explicitly stated that the Android code, although found in Samsung’s
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`products, was “dead” and had no functional role in those devices. At that point, CyWee essentially
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`had to start over, both with respect to the products that incorporated the Qualcomm algorithm and
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`the products that incorporated Samsung’s own algorithm.3 Under these circumstances, the Court
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`concludes that CyWee has shown that there were legitimate reasons for the delay in serving its
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`amended infringement contentions and that it was reasonably diligent in seeking relief from the
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`time limits set forth in the Court’s docket control order.
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`For the foregoing reasons, the Court concluded that CyWee’s motion to supplement its
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`expert report, Dkt. No. 176, should be GRANTED and Samsung’s motion to strike CyWee’s
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`untimely supplemental infringement claims, Dkt. No. 187, should be DENIED.
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`3 Although CyWee places the blame on Samsung for “hiding the ball” at various points
`in the discovery process, the Court does not find Samsung’s conduct in the discovery
`proceedings to have been improper. While Samsung could have been more forthcoming at
`certain points and while Samsung was not always as prompt in responding to CyWee’s requests
`as CyWee wanted, for the most part Samsung was responsive and cooperative.
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`Case 2:17-cv-00140-WCB-RSP Document 250 Filed 11/07/18 Page 15 of 15 PageID #:
` 11220
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`IT IS SO ORDERED.
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`SIGNED THIS 7th day of November, 2018
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`_______________________________
`WILLIAM C. BRYSON
`UNITED STATES CIRCUIT JUDGE
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