Case 5:19-cv-00036-RWS Document 126 Filed 11/13/19 Page 1 of 11 PageID #: 5362
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`TEXARKANA DIVISION
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`CIVIL ACTION NO. 5:19-CV-00036-RWS
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`Plaintiff,
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`MAXELL LTD.,
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`v.
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`APPLE INC,
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`Defendant.
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`ORDER
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`Before the Court is Plaintiff Maxell, Ltd.’s Opposed Motion to Compel Apple Inc. to
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`Produce Timely Discovery (Docket No. 56). Maxell moves to compel document production and
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`responses to Interrogatory Nos. 2–9. For the reasons set forth below, Maxell’s motion is
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`GRANTED-IN-PART and DENIED-IN-PART.
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`I.
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`Legal Standard
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`Under Rule 26(b)(1) of the Federal Rules of Civil Procedure, “[p]arties may obtain
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`discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense . . . .”
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`FED. R. CIV. P. 26(b)(1). Federal Rule of Evidence 401 defines relevant evidence “as evidence
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`having any tendency to make the existence of any fact that is of consequence to the determination
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`of the action more probable or less probable than it would be without the evidence.” “Relevancy
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`is broadly construed, and a request for discovery should be considered relevant if there is ‘any
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`possibility’ that the information sought may be relevant to the claim or defense of any party.”
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`Merrill v. Waffle House, Inc., 227 F.R.D. 467, 470 (N.D. Tex. 2005) (citations omitted).
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`The discovery rules are given broad and liberal treatment to achieve their purpose of
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`adequately informing litigants in civil trials. Herbert v. Lando, 441 U.S. 153, 176 (1979). “It
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`hardly bears repeating that control of discovery is committed to the sound discretion of the trial
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`Case 5:19-cv-00036-RWS Document 126 Filed 11/13/19 Page 2 of 11 PageID #: 5363
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`court . . . .” Williamson v. U.S. Dep’t of Agric., 815 F.2d 368, 382 (5th Cir. 1987). Nevertheless,
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`discovery does have “ultimate and necessary boundaries.” Oppenheimer Fund, Inc. v. Sanders,
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`437 U.S. 340, 351 (1978) (quoting Hickman v. Taylor, 329 U.S. 495, 507 (1947)).
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`“The party resisting discovery bears the burden to clarify and explain its objections and to
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`provide support for those objections.” Fed. Trade Comm’n v. Liberty Supply Co., No. 4:15-cv-
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`829, 2016 WL 4272706, at *4 (E.D. Tex. Aug. 15, 2016) (quoting Enron Corp. Savings Plan v.
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`Hewitt Assocs., L.L.C., 258 F.R.D. 149, 159 (S.D. Tex. 2009). Additionally, “the party resisting
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`discovery must show specifically how . . . each [request] is not relevant or how each question is
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`overly broad, burdensome or oppressive:”
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`In order to satisfy its burden, the objecting party must make a specific, [detailed
`showing of how a request is burdensome. A mere] statement by a party that a
`request is overly broad and unduly burdensome is not adequate to voice a successful
`objection. Broad-based, non-specific objections are almost impossible to assess on
`their merits, and fall woefully short of the burden that must be borne by a party
`making an objection to an interrogatory or document request. A party asserting
`undue burden typically must present an affidavit or other evidentiary proof of the
`time or expense involved in responding to the discovery request.
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`Id. (quotations and citations omitted). Because the Defendants seek to limit the world of
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`discoverable material, they bear burden of justifying their proposed limitation. Id.
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`II. Motion to Compel Documents
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`Maxell asks the Court to compel Apple to “substantially complete its document
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`production.” Maxell argues that this action’s Docket Control Order (Docket No. 46) and
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`Discovery Order (Docket No. 42) required both parties to produce “all documents . . . that are
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`relevant to the pleaded claims or defenses involved in this action, except to the extent these
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`disclosures are affected by the time limits set forth in the Patent Rules . . .” by July 10, 2019. Yet,
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`according to Maxell, Apple only produced 190 documents on July 10 and is trying to “slow-roll
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`production at least until the close of fact discovery.”
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`Apple accuses Maxell of seeking to impose an arbitrary document production deadline.
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`Apple contends that “no court in this district has ever interpreted the Paragraph 3(b) date as a
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`deadline to complete document production.” Apple also points out that Maxell did not comply
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`with its interpretation of the order by producing additional documents on July 29. Apple assures
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`the Court that it is complying with the Discovery Order, having produced documents on July 18,
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`July 26, August 2 and August 14.
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`Maxell is correct that the date to “Comply with Paragraphs 1 & 3 of the Discovery Order
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`(Initial and Additional Disclosures)” provided in the parties’ Docket Control Order was not merely
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`the date that discovery begins. Cf. FED. R. CIV. P. 26(d)(1) (explaining that discovery may
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`commence after the parties comply with Rule 26(f)). However, in this case, it was unreasonable
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`to expect Apple to produce all relevant documents, apart from those provided for in the Local
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`Patent Rules, by July 10.1
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`Maxell accused various functions and technologies in numerous Apple iOS devices,
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`including several generations of iPhone and iPad products, of infringing 10 patents. Such broad
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`allegations necessarily contemplate extensive discovery and document production. Cf. FED. R.
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`CIV. P. 26(b)(1) (Discovery should be “proportional to the needs of the case, considering the
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`importance of the issues at stake in the action [and] the amount in controversy . . . .”). As is typical,
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`the parties agreed to an “Additional Disclosures” deadline that fell less than two months after
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`Apple answered the complaint and less than one month after the Court’s scheduling conference.
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`But it is clear by the present dispute that the parties did not agree what this deadline meant. Though
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`1 Maxell’s motion to compel was filed before the August 14, 2019 deadline to comply with P.R. 3-4. At the hearing
`on the present motion, Maxell suggested that Apple had not produced “documentation sufficient to show the operation
`of any aspects or elements of an Accused Instrumentality identified by the patent claimant in its P. R. 3-1(c) chart” as
`required by P.R. 3-4. Apple contends it complied with the Patent Rules. As this issue was not briefed, and is not
`properly before the Court, the Court will not address this allegation.
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`Apple should have begun collecting and producing documents before the Additional Disclosures
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`deadline, its inability to complete document production by that deadline is understandable.
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`Based on the present pleadings and arguments, however, the Court cannot determine
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`whether Apple has met its discovery obligations to date. The parties agree document production
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`is ongoing, and Apple represented that it does not have some of the categories of documents Maxell
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`seeks. Moreover, Apple has not taken the position that there is any category of document that it
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`will not produce, other than those addressed in Interrogatory No. 9. Without some evidence, other
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`than attorney argument, the Court cannot weigh the truth of these assertions. See Fed. Trade
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`Comm’n v. Liberty Supply Co., 2016 WL 4272706, at *4.
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`Apple agreed to substantially complete all discovery by November 27, 2019, Docket No.
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`100 at 69:16–19, and the Court expects it to meet this deadline. Accordingly, Maxell’s motion to
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`compel document production is DENIED. However, this order does not reduce or eliminate
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`Apple’s obligation to “produce or permit the inspection of all documents, electronically stored
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`information, and tangible things in [its] possession, custody, or control that are relevant to the
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`pleaded claims or defenses involved in this action.”
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`III.
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`Interrogatory No. 2
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`Interrogatory No. 2 requests Apple’s non-infringement contentions:
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`To the extent You contend that any Accused Product does not infringe any Asserted
`Claim of any Patent-in-Suit, state, with particularity for each such claim, limitation-
`by- limitation, Your full basis for any such contention
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`This district’s local patent rules do not require non-infringement contentions. Huawei
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`Techs. Co. v. T-Mobile US, Inc., No. 2:16-cv-00052-JRG-RSP, 2017 WL 9988630, at *1 (E.D.
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`Tex. Aug. 25, 2017). Instead, those contentions are left for expert opinions and expert discovery.
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`“A party is not entitled to obtain early disclosure of expert opinions via interrogatory.”
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`Promethean Insulation Tech. LLC v. Sealed Air Corp., No. 2:13-CV-1113-JRG-RSP, 2015 WL
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`Case 5:19-cv-00036-RWS Document 126 Filed 11/13/19 Page 5 of 11 PageID #: 5366
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`11027038, at *2 (E.D. Tex. Oct. 13, 2015). Maxell’s Interrogatory No. 2 seeks expert discovery
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`that is not appropriate at this phase of litigation. Accordingly, Maxell’s motion to compel is
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`DENIED with respect to Interrogatory No. 2.
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`IV.
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`Interrogatory No. 3
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`Maxell requests that Apple identify all intellectual property agreements that relate to the
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`Accused Products:
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`Identify all patent licenses, covenants-not-to-sue, or other agreements Concerning
`patents or intellectual property (collectively, “Agreements”) to which You are a
`party that relate to the Accused Products or products that are reasonably similar to
`the Accused Products, and, for each such Agreement, identify the parties, the date
`it was entered into, the termination date (if any), the royalty rate and/or
`consideration paid, and identify how the parties arrived at such royalty rate and/or
`consideration.
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`In general, licenses and other agreements are discoverable. See, e.g., Charles E. Hill &
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`Assocs., Inc. v. ABT Elecs., Inc., 854 F. Supp. 2d 427, 428 (E.D. Tex. 2012) (noting, in analyzing
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`whether settlement negotiations are privileged,
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`that
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`license agreements are generally
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`discoverable). Apple has not established why it should not be required to produce and identify the
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`Agreements Maxell asks for. Nor has Apple carried its burden to explain why it waited so long to
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`begin seeking third-party consent for certain Agreements.
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`However, Maxell’s demand that Apple “identify how the parties arrived at such royalty
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`rate and/or consideration” for each Agreement is overbroad and unduly burdensome. This demand
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`seeks a narrative response with respect to each Agreement related to every Accused Product and
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`every similar product. The burden of this discovery outweighs its likely benefit. Accordingly,
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`Maxell’s motion to compel is GRANTED-IN-PART with respect to Interrogatory No. 3’s
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`demand to identify Agreements, and DENIED-IN-PART with respect to the demand to “identify
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`how the parties arrived at such royalty rate and/or consideration.”2
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`V.
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`Interrogatory No. 4
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`Maxell requests sales and customer date with Interrogatory No. 4:
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`For each Accused Product, state in detail on a monthly, quarterly and yearly basis,
`all sales, revenues, income, and profits generated by or realized from the licensing,
`sales or distribution of such product from 2013 to present, including but not limited
`to, (a) the number of units sold, distributed, and/or licensed, (b) the gross revenue
`(dollars) generated from the sales, distribution, and/or licensing, (c) the production
`cost, (d) the gross profit margin attendant to the sales, distribution, and/or licensing,
`(e) the net profit margin attendant to the sales, distribution, and/or licensing, (f) the
`Entities responsible for the sales, distribution, and/or licensing, (g) the customers
`of the sales, distribution, and/or licensing, and (h) the location of such sales,
`distribution, and/or licensing.
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`The dispute as to this interrogatory relates to sections (f)–(h). The parties dispute the
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`breadth of these requests. Apple understands this request to ask for information related to every
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`customer and end-user of the accused products. Accordingly, Apple states it has not and will not
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`produce this information, because, in part, it is irrelevant and collecting this information would be
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`unduly burdensome. Maxell represents it is not seeking information about individuals purchasing
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`phones. Instead, Maxell seeks information about distribution channels and large resellers.
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`Apple has failed to establish that this request, as clarified by Maxell, is unduly burdensome,
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`not proportional to the needs of the case or cumulative. Accordingly, Maxell’s motion to compel
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`is GRANTED as to Interrogatory No. 4.
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`VI.
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`Interrogatory No. 5
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`Maxell requests that Apple explain the circumstance around Apple’s first notice of the
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`Asserted Patents and what Apple did in response:
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`2 Nothing in this order should be construed to limit discovery into how specific agreements were reached, where
`appropriate.
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`For each Patent-in-Suit, state with particularity the circumstances surrounding Your
`first awareness of the patent, including the date when You first became aware of
`the patent, the Persons involved in the circumstances and events when You first
`became aware of the patent, the identity and content of any Communications or
`Documents relating to Your awareness of the patent, and all actions taken by You
`relating to, or as a result of, Your becoming aware of the patent, including any
`Communications, Documents, and/or actions related to a potential business
`arrangement between Maxell and Apple.
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`Maxell contends Apple has produced documents that Apple asserts are responsive to this
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`interrogatory. However, Maxell asserts that these documents do not fully respond to the
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`interrogatory and fail to explain the circumstances surrounding such awareness and what action,
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`if any, was taken upon such awareness. Apple responds that the years of negotiations between the
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`parties do not provide a basis for Apple to provide a narrative response describing each action
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`taken over that time period. Moreover, Apple contends that Maxell now has all the relevant
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`information needed through its document production.
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`Apple has not established that it may avoid explaining what, if anything, Apple did in
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`response to its first awareness of the Patents-in-Suit. Though documents and emails may show the
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`conversations that lead to first awareness, those documents may not reflect actions taken or not
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`taken. Apple also provided no specific explanation of its burden in responding to this interrogatory
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`by giving a narrative response. Accordingly, Maxell’s motion to compel Interrogatory No. 5 is
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`GRANTED.
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`VII.
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`Interrogatory No. 6
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`With Interrogatory No. 6, Maxell seeks information about the components comprising the
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`accused product and provided a chart explaining the information sought:
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`Complete the attached chart entitled “Interrogatory No. 6” identifying for each
`Accused Product the supplier, internal model number, and supplier model number
`of the relevant components implicated by the Patents-in-Suit, such as the
`components implicated in implementing or performing the Accused Features or
`Functions, including the dates Apple utilized such components in each Accused
`Product, and identify the cost to You for each component from 2013 to present. If
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`there are any other components configured to implement the Accused Features or
`Functions from 2013 to present, identify such component and the requested
`information at the end of the chart.
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`The attached chart seeks the “Internal Model No.,” “Supplier,” “Supplier Model No.” and “Cost
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`Per Unit” for 21 components3 found in each of the 121 accused products.
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`Apple complains that this interrogatory asks for 10,164 different pieces of information and
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`is compound. Apple contends that the information this interrogatory seeks is available in the Bills
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`of Material (“BOMs”) and Cost Pub. Documents Apple has produced.
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`When “the answer to an interrogatory may be determined by examining, auditing,
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`compiling, abstracting, or summarizing a party’s business records,” Rule 33(d) allows a party to
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`respond by specifying records that must be reviewed. However, this rule only applies where “the
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`burden of deriving or ascertaining the answer will be substantially the same for either party.” Here,
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`the BOMs are separate documents that are hundreds of pages long. Each BOM may contain some
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`of the information sought by this interrogatory, but Apple has not contended that any one, or any
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`subset, includes all the information Maxell seeks. Apple “may not avoid answers by imposing on
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`the interrogating party a mass of business records from which the answers cannot be ascertained
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`by a person unfamiliar with them.” Quintel Tech. Ltd. v. Huawei Techs. USA, Inc., No. 4:15-cv-
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`307-AM-CMC, 2017 WL 3712346, at *7 (E.D. Tex. June 29, 2017) (citing Oleson v. Kmart Corp.,
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`175 F.R.D. 560, 564 (D. Kan. 1997)).
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`The information Maxell seeks is basic information on the components Apple uses in its
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`products: model numbers, suppliers and costs. Though Apple’s counsel argued otherwise, “[i]t is
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`3 Not every component is found in every product. The components are: Application Processor chipset, Camera
`Module(s) (Primary/Front-Facing), Camera Module(s) (Secondary/Rear-Facing) Image Sensor(s) (Secondary/Rear-
`Facing), Bluetooth Chipset, GPS Chipset, WiFi Chipset, Baseband Processor Chipset, Gyroscope(s), Accelerometer,
`Proximity Sensor, Power Management Circuit / Processor, Audio Decoder, Antenna, RF Chipset, Compass Image
`Signal Processor, Duplexer, Power Amplifier and Processor/CPU.
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`difficult to imagine how [Maxell] and Apple could be in the same position to obtain the requested
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`information about [who provides] Apple’s [components]” and how much they cost. See Pers.
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`Audio, LLC v. Apple, Inc., No. 9:09-CV-111, 2010 WL 9499679, at *3 (E.D. Tex. June 1, 2010)
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`(analyzing reliance on Rule 33(d) to explain how accused products work). Under these
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`circumstances, Apple’s use of Rule 33(d) does not provide Maxell sufficient detail to permit it to
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`locate and identify the information as readily as Apple can; therefore, Maxell’s motion to compel
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`Interrogatory No. 6 is GRANTED.
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`VIII. Interrogatory No. 7
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`Maxell’s Interrogatory No. 7 asks Apple to identify any step it has ever taken to avoid
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`infringing any claim of any Asserted Patent:
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`Identify the steps, if any, You have ever taken to avoid infringing any claim of any
`Patent-in-Suit. For instance, include in Your response a description of all activities
`and circumstances relating to any actual, proposed, contemplated, or attempted
`design modifications involving each Accused Product since becoming aware of
`such Patent-in-Suit.
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` Apple argues that this interrogatory asks for expert discovery. It does not. The
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`interrogatory only asks for the facts concerning what steps, if any, Apple took in response to
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`allegations of infringement, such as modifying products or designing around the Asserted Patent.
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`It does not seek expert opinion, such as whether products infringe the Asserted Patents or whether
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`the Asserted Patents are invalid. Accordingly, Maxell’s motion to compel is GRANTED as to
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`Interrogatory No. 7.
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`IX.
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`Interrogatory No. 8
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`Maxell requests that Apple identify any alleged non-infringing alternatives:
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`If You contend that acceptable, non-infringing alternatives to the inventions
`claimed in the Patents-in-Suit have existed or exist, specifically describe each
`alternative, state when it became available, describe in detail the basis for Your
`contention that it is non-infringing, and identify all Documents related to this
`contention.
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`Apple cannot wait until the discovery deadline to produce the documents it may contend
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`are non-infringing alternatives. Doing so would deprive Maxell of the opportunity to conduct its
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`own discovery into the existence, availability and feasibility of these alternatives. However, as
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`discussed with Interrogatory No. 2, Apple is not required to provide expert opinion testimony until
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`that deadline, so it need not “describe, in detail, the basis for its contention that it is non-
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`infringing.” Accordingly, Maxell’s motion to compel is GRANTED-IN-PART and DENIED-
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`IN-PART as to Interrogatory No. 8.
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`X.
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`Interrogatory No. 9
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`In Interrogatory No. 9, Maxell requests sales forecasts and projections:
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`State all facts and identify, by bates number, all Documents related to any sales
`forecasts and/or projections prepared by or for You, including without limitation
`forecasts and/or projections related to projected revenue, profitability, and/or units
`of iPhones, iPads, iPod Touches, Apple Watches, and Mac products expected or
`anticipated to be sold or distributed in the United States on or before 2022.
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`Maxell says this interrogatory is relevant to damages, including damages from future use of the
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`patented invention.
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`Apple contends that any sales forecasts are not proportional to the needs of the case
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`“because Apple (1) produced financial data for actual sales, and (2) can provide supplemental
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`discovery regarding sales extending beyond fact discovery.” Apple argues that the forecasts are
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`only relevant to future damages, “[b]ut Maxell can make such an estimate by extrapolating from
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`past sales.” According to Apple, “there is no prejudice to Maxell not getting forecasts if Apple
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`will itself not rely on them.” Apple further agreed that it would not challenge Maxell’s expert’s
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`extrapolation methodology, but clarified that it may still challenge Maxell’s expert’s calculation.
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`Maxell did not agree to this stipulation.
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`The parties agree that future sales are relevant to this case. Apple has not provided a
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`convincing argument for avoiding answering this interrogatory. That Apple has and continues to
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`produce sales data does not explain why it would be burdensome or disproportionate to produce
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`its sales forecasts. Accordingly, Maxell’s motion to compel is GRANTED as to Interrogatory
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`No. 9.
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`XI. Conclusion
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`As set forth above, it is ORDERED that Maxell’s motion to compel (Docket No. 56) is
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`GRANTED as to Interrogatory Nos. 4, 5, 6, 7 and 9. It is further
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`ORDERED that Maxell’s motion to compel is GRANTED-IN-PART and DENIED-IN-
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`PART as to Interrogatory Nos. 3 and 8. Finally, it is
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`ORDERED that Maxell’s motion to compel is DENIED with respect to Interrogatory
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`No. 2 and Maxell’s motion to compel document production.
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`Page 11 of 11
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`.
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`____________________________________
`ROBERT W. SCHROEDER III
`UNITED STATES DISTRICT JUDGE
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`So ORDERED and SIGNED this 13th day of November, 2019.
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