Case 2:21-cv-00040-JRG Document 130 Filed 11/23/21 Page 1 of 9 PageID #: 3767
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
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`
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`CASE NO. 2:21-cv-00040-JRG
`(Lead Case)
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`JURY TRIAL DEMANDED
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`CASE NO. 2:21-cv-00041-JRG
`(Member Case)
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`JURY TRIAL DEMANDED
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`GESTURE TECHNOLOGY
`PARTNERS, LLC,
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`Plaintiff
`
`v.
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`HUAWEI DEVICE CO., LTD.,
`HUAWEI DEVICE USA, INC.,
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`Defendants.
`
`
`GESTURE TECHNOLOGY
`PARTNERS, LLC,
`
`Plaintiff
`
`v.
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`SAMSUNG ELECTRONICS CO., LTD.
`AND SAMSUNG ELECTRONICS
`AMERICA, INC.,
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`Defendants.
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`SAMSUNG DEFENDANTS’ MOTION TO COMPEL PRODUCTION OF
`SETTLEMENT NEGOTIATION DOCUMENTS
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`

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`Case 2:21-cv-00040-JRG Document 130 Filed 11/23/21 Page 2 of 9 PageID #: 3768
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`Offers made in licensing negotiations matter. For example, the Federal Circuit affirmed
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`this Court’s use of a patentee’s initial offer during licensing negotiations to establish a “lower
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`bound on a reasonable royalty.” Commonwealth Sci. & Indus. Research Org. v. Cisco Sys., Inc.,
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`809 F.3d 1295, 1302–04 (Fed. Cir. 2015) (“CSIRO”) (Fed. Cir. 2015) (upholding Judge Davis’s
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`damages order “that took account of the parties’ informal negotiations”). Fairness requires that
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`GTP produce to Samsung the “informal negotiations” it had with Huawei to license the Asserted
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`Patents in this case.
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`I.
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`
`
`INTRODUCTION
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`Pursuant to Fed. R. Civ. P. 37(a)(3)(B)(iv) and Local Rule CV-26(d), Defendants Samsung
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`Electronics Co., Ltd. and Samsung Electronics America, Inc. (“Samsung”) move for an order
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`compelling Plaintiff Gesture Technology Partners, LLC (“GTP”) to produce all draft agreements
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`and all communications between GTP and Huawei Device Co., Ltd. and Huawei Device USA,
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`Inc. (“Huawei”) relating to their negotiation of an agreement to resolve GTP’s claims against
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`Huawei based on the Asserted Patents (“Huawei Agreement”).1
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`Samsung learned of GTP’s “settlement in principle” with Huawei on October 19, 2021,
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`when GTP and Huawei filed a Joint Motion to Stay Certain Deadlines and Notice of Partial
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`Settlement. Dkt. 101. On October 25, Samsung requested that GTP produce all documents and
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`communications reflecting or relating to the Huawei settlement, including those that “reflect or
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`relate to the parties’ negotiations leading to the settlement.” Ex. 1. Having heard no response,
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`Samsung requested the documents and communications again on October 28. Ex. 2. Samsung
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`1 On February 4, 2021, GTP filed separate lawsuits against Samsung and Huawei, accusing each
`of infringing the same Asserted Patents: U.S. Patent Nos. 7,933,431, 8,194,924, 8,553,079, and
`8,878,949. See Gesture Technology Partners, LLC v. Huawei Device Co., Ltd. and Huawei Device
`USA, Inc., Case No. 2:21-cv-00040-JRG, Dkt. 1; Gesture Technology Partners, LLC v. Samsung
`Elecs. Co., Ltd., et al., Case No. 2:21-cv-00041-JRG, Dkt. 1. On April 16, 2021, the Court
`consolidated the two cases for all pretrial issues. Case No. 2:21-cv-00040-JRG, Dkt. 14.
`
`-1-
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`

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`Case 2:21-cv-00040-JRG Document 130 Filed 11/23/21 Page 3 of 9 PageID #: 3769
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`articulated that it is prejudiced by delayed disclosure of these documents and communications,
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`especially in light of the impending deadline for its rebuttal expert report on damages. GTP
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`responded, stating that “[a]ny correspondence leading up to the executed license agreement is
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`privileged and not the proper subject of discovery.” Id. On that basis, GTP refused to produce the
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`settlement negotiation documents.
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`GTP is wrong. Draft agreements and correspondence leading to an executed settlement
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`agreement are not privileged. In re MSTG, Inc., 675 F.3d 1337, 1348 (Fed. Cir. 2012). Particularly
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`here, the settlement negotiation documents are relevant (potentially highly so) to a determination
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`of appropriate damages, if any, because GTP and Huawei “negotiated over the value of the asserted
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`patent[s], ‘and no more.’” CSIRO, 809 F.3d at 1303 (citation omitted). Thus, Samsung
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`respectfully requests that the Court grant its motion to compel GTP to produce these documents
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`and communications.2
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`II.
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`LEGAL STANDARD
`A party may discover “any nonprivileged matter that is relevant to any party’s claim or
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`defense and proportional to the needs of the case . . . .” Fed. R. Civ. P. 26(b)(1). Discovery of
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`documents and communications under Rule 26(b) extends to electronically stored information.
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`Fed. R. Civ. P. 34(a)(1)(A). A party may move for an order compelling disclosure or discovery if
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`the opposing party fails to produce the “nonprivileged matter” falling within the scope of Rule 34.
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`Fed. R. Civ. P. 37(a)(3)(B)(iv). See also Charles E. Hill & Assocs., Inc. v. ABT Elecs., Inc., 854
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`F. Supp. 2d 427, 428 (E.D. Tex. 2012).
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`2 Samsung’s rebuttal expert report as to damages is due on November 22, 2021. Having not yet
`received the Huawei Agreement or any related documents or communications, Samsung reserves
`the right to seek leave to supplement its rebuttal expert report after GTP produces the Huawei
`Agreement and/or related documents and communications.
`
`-2-
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`

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`Case 2:21-cv-00040-JRG Document 130 Filed 11/23/21 Page 4 of 9 PageID #: 3770
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`III. ARGUMENT
`A.
`Settlement Negotiations Underlying the Huawei Agreement Are Not
`Privileged
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`Documents and communications between parties regarding a prospective patent license to
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`settle a lawsuit are not “privileged,” as GTP claims. The Federal Circuit addressed this issue in
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`2012, finding that “settlement negotiations related to reasonable royalties and damage calculations
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`are not protected by a settlement negotiation privilege.” In re MSTG, 675 F.3d at 1348. The Court
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`held that Federal Rule of Evidence 408 does not protect settlement negotiations from discovery,
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`id., and that a district court’s proper use of discretion to limit discovery of such negotiations
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`satisfies Congress’s public policy goal of protecting confidential communications. Id. at 1347.
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`Further, this Court’s precedent is in-line with In re MSTG. See SOL IP, LLC v. AT&T Mobility
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`LLC, No. 2:18-cv-00526-RWS-RSP, 2020 WL 60140 (E.D. Tex. Jan. 6, 2020) (granting motion
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`to compel discovery of executed license); Charles E. Hill, 854 F. Supp. 2d 427.
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`B.
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`Settlement Negotiations Underlying the Huawei Agreement Are Relevant
`and Proportional to the Needs of the Case
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`The Huawei Agreement, once finalized, will be the only consummated license involving
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`any of the Asserted Patents. Thus, this agreement may ultimately be the “most reliable” source of
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`information relating to determination of a reasonable royalty. See ResQNet.com, Inc. v. Lansa,
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`Inc., 594 F.3d 860, 872 (Fed. Cir. 2010).
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`The only other documents relating to GTP’s valuation of the Asserted Patents are a select
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`set of license negotiation documents between Dr. Timothy Pryor (GTP’s founder and principal,
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`and the sole named inventor) and
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` From
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`those documents already produced, Samsung learned that Dr. Pryor offered
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` a license to
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`3 The full set of these license negotiation documents with third parties are the subject of a separate
`Motion to Compel. Dkt. 100.
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`-3-
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`Case 2:21-cv-00040-JRG Document 130 Filed 11/23/21 Page 5 of 9 PageID #: 3771
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`the “
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`Portfolio”—a portfolio of thirteen patents including the four Asserted Patents—for a
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`lump sum payment of $
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`(which
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`rejected). Dkt. Nos. 100, 121. Besides attempts
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`to license the
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` Portfolio, Dr. Pryor has transferred patent rights to his
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` Portfolio.”
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`For instance, Dr. Pryor sold 16 patent properties from the
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` Portfolio to
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` in 2010 for a
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`lump sum payment of $
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` and licensed four patents from the
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` Portfolio to
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` for a lump sum payment of $
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`.
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`In light of these facts, Samsung’s request to compel the settlement negotiation documents
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`here is similar to the requests this Court granted in Charles E. Hill and in Clear with Computers,
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`LLC v. Bergdorf Goodman, Inc., 753 F. Supp. 2d 662 (E.D. Tex. 2010). In both cases, the patentee
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`was a non-practicing entity that did not compete with the defendant in the marketplace. Charles
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`E. Hill, 854 F. Supp. 2d at 430. The same is true here—GTP’s sole business is to “litigate and
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`license.” Id. “Accordingly, the settlement communications will be a valid consideration in
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`determining whether the settlement agreements themselves accurately reflect the patents’ value.”
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`Id. Also, in both cases, the patentee produced documents reflecting inconsistent patent valuations.
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`In Charles E. Hill, for example, the patentee had produced agreements valuing its patents between
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`$3.5 million and $100,000. Id. Here, GTP has produced documents reflecting valuations of Dr.
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`Pryor’s patents of
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` (for a license to the
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` Portfolio containing the four Asserted
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`Patents), $
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` (for a license to four
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`Portfolio patents), and $
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`(for the sale of
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`16
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` Portfolio patent properties). It follows that “[t]he draft versions of [the Huawei
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`Agreement] as well as the underlying negotiations will help to clarify these discrepancies.” Id.
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`Further, these documents will be helpful to determine “whether and to what extent” the Huawei
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`Agreement is “the result of a compromise or reflects a desire to avoid litigation.” Tyco Healthcare
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`Grp. LP v. E-Z-EM, Inc., No. 2:07-CV-262-TJW, 2010 WL 774878, at *2 (E.D. Tex. Mar. 2,
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`2010).
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`-4-
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`

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`Case 2:21-cv-00040-JRG Document 130 Filed 11/23/21 Page 6 of 9 PageID #: 3772
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`In addition to the factors the Court considered in Charles E. Hill and Clear with Computers,
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`the settlement negotiation documents requested here will further lend insight into the Georgia-
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`Pacific analysis. For example, the documents can provide guidance as to GTP’s licensing program
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`(factor 4); GTP’s understanding of the benefits Huawei (and allegedly Samsung) has received by
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`using the claimed inventions (factor 10); GTP’s valuation for using the inventions (factor 11); and
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`GTP’s understanding of the portion of realizable profit that should be credited to the inventions
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`(factor 13). The settlement negotiation documents will thus provide a fuller picture of GTP’s
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`valuation of the Asserted Patents, and will enable a more accurate and complete analysis of what
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`damages, if any, may be appropriate.
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`Finally, the requested settlement negotiation documents are relevant under the Court’s
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`Local Rule CV-26(d). For example, these documents and communications may show that GTP
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`sought a royalty from Huawei on the order of what GTP was willing to accept from
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`(i.e.,
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`$
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`). This is a far cry from the $
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` in damages GTP now demands from Samsung.
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`The documents and communications can thus “have an influence on or affect the outcome” of
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`Samsung’s defense against GTP’s damages claim. See L.R. CV-26(d)(1), (3). They will very
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`likely be considered by Samsung in the immediate future, for Samsung’s rebuttal expert report,
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`and in several months, for Samsung’s trial presentation.4 Id. at (d)(4), (5).
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`In sum, the requested settlement negotiation documents are relevant (potentially highly so)
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`to the claims and defenses in this action, and disclosure of these documents and communications
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`may help the parties arrive at a more accurate determination of the damages, if any, that may be
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`appropriate. Thus, the Court should compel GTP to produce the settlement negotiation documents
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`without further delay.
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`4 See supra n.2.
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`-5-
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`Case 2:21-cv-00040-JRG Document 130 Filed 11/23/21 Page 7 of 9 PageID #: 3773
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`IV. CONCLUSION
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`For the foregoing reasons, Samsung respectfully requests that the Court grant its Motion
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`to Compel and order GTP to produce all draft agreements and all communications between GTP
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`and Huawei relating to their negotiation of the Huawei Agreement.5
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`
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`DATED: November 19, 2021
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`Respectfully submitted,
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`
`By: /s/ Christopher W. Kennerly
`Christopher W. Kennerly (TX Bar No. 00795077)
`chriskennerly@paulhastings.com
`Radhesh Devendran (pro hac vice)
`radheshdevendran@paulhastings.com
`Boris S. Lubarsky (pro hac vice)
`borislubarsky@paulhastings.com
`David M. Fox (pro hac vice)
`davidfox@paulhastings.com
`PAUL HASTINGS LLP
`1117 S. California Avenue
`Palo Alto, CA 94304
`Telephone: (650) 320-1800
`Facsimile: (650) 320-1900
`
`Allan M. Soobert
`allansoobert@paulhastings.com
`PAUL HASTINGS LLP
`2050 M Street NW
`Washington, D.C. 20036
`Telephone: 202-551-1700
`Facsimile: 202-551-1705
`
`Elizabeth L. Brann
`elizabethbrann@paulhastings.com
`PAUL HASTINGS LLP
`4747 Executive Drive, 12th Floor
`San Diego, CA 92121
`Telephone: (858) 458-3000
`
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`5 For example, on November 2, 2021, GTP sent Huawei a letter asking when it would “have
`Huawei’s edits on the draft settlement agreement we provided on October 18.” Ex. 3. Samsung
`requests the immediate production of settlement negotiation documents that have already been
`created up to this date (November 19, 2021) and, after final execution of the Huawei Agreement,
`all remaining settlement negotiation documents.
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`-6-
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`Case 2:21-cv-00040-JRG Document 130 Filed 11/23/21 Page 8 of 9 PageID #: 3774
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`Facsimile: (858) 458-3005
`
`Robert Laurenzi
`robertlaurenzi@paulhastings.com
`PAUL HASTINGS LLP
`200 Park Avenue
`New York, NY 10166
`Telephone: (212) 318-6000
`Facsimile: (212) 319-4090
`
`Melissa R. Smith (TX Bar No. 24001351)
`GILLAM & SMITH, LLP
`303 S. Washington Ave.
`Marshall, TX 75670
`Telephone: (903) 934-8450
`Facsimile: (903) 934-9257
`melissa@gillamsmithlaw.com
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`Attorneys for Defendants Samsung Electronics
`Co., Ltd and Samsung Electronics America, Inc.
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`CERTIFICATE OF CONFERENCE
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`Pursuant to Local Rules CV-7(h) and (i), counsel for Samsung has met and conferred with
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`counsel for GTP. On October 25, Samsung requested that GTP produce all documents and
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`communications reflecting or relating to the Huawei settlement, including those that “reflect or
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`relate to the parties’ negotiations leading to the settlement.” Ex. 1. In this correspondence,
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`Samsung requested GTP’s availability to meet and confer. Having heard no response, Samsung
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`requested the documents and communications again on October 28. Ex. 2. Samsung articulated
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`that it is prejudiced by delayed disclosure of these documents and communications, especially in
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`light of the impending deadline for its rebuttal expert report on damages. Samsung also again
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`requested GTP’s availability to meet and confer. On October 29, GTP responded by email stating
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`its refusal to produce “[a]ny correspondence leading up to the executed license agreement.” Id.
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`That same day, GTP’s lead counsel called Samsung’s local counsel to confirm that GTP will not
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`produce negotiation documents leading to the Huawei Agreement. The parties are thus at an
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`-7-
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`Case 2:21-cv-00040-JRG Document 130 Filed 11/23/21 Page 9 of 9 PageID #: 3775
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`impasse. No agreement could be reached after good faith attempts to resolve the matters raised by
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`this motion, leaving an open issue for the Court to resolve.
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`
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` /s/ Christopher W. Kennerly
`Christopher W. Kennerly
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`CERTIFICATE OF AUTHORIZATION TO SEAL
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`I hereby certify that under Local Rule CV-5(a)(7), the foregoing document is filed under
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`seal pursuant to the Court’s Protective Order entered in this matter.
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` /s/ Christopher W. Kennerly
`Christopher W. Kennerly
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`CERTIFICATE OF SERVICE
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`I hereby certify that a true and correct copy of the foregoing document was filed
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`electronically in compliance with Local Rule CV-5 on November 19, 2021. As of this date, all
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`counsel of record had consented to electronic service and are being served with a copy of this
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`document through the Court’s CM/ECF system under Local Rule CV-5(a)(3)(A) and by email.
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` /s/ Christopher W. Kennerly
`Christopher W. Kennerly
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`-8-
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