Case 5:19-cv-00036-RWS Document 170 Filed 12/23/19 Page 1 of 11 PageID #: 7624
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`TEXARKANA DIVISION
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`Case No. 5:19-cv-00036-RWS
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`Plaintiff,
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`Defendant.
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`LEAD CASE
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`JURY TRIAL DEMANDED
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`MAXELL, LTD.,
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`v.
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`APPLE INC.,
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`MAXELL, LTD.’S OPPOSITION TO APPLE’S MOTION TO COMPEL LICENSING
`AND NEGOTIATION DOCUMENTS
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`Case 5:19-cv-00036-RWS Document 170 Filed 12/23/19 Page 2 of 11 PageID #: 7625
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`Apple has repeatedly withheld and delayed discovery throughout this litigation. Maxell,
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`on the other hand, has complied with its obligations, including substantially completing its
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`production early in discovery. Apple now claims Maxell withheld materials, despite those
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`materials not being in Maxell’s possession, custody or control. In fact, Maxell personnel are not
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`able even to see these materials because they are Apple’s CBI and review is limited by the
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`Protective Order in this case. Still, to try to facilitate the materials’ production and aid Apple in
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`discovery, Maxell requested these materials from Hitachi directly, a request that was essentially
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`ignored. Nevertheless, perhaps believing that Maxell operates as Apple does—withholding and
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`delaying relevant discovery—Apple moves to compel these materials.1 Apple’s motion is
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`baseless and founded on a grossly misleading recitation of “facts” and suggestions, and it should
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`be denied in its entirety.
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`I.
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`BACKGROUND
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`Because Apple so grossly mischaracterizes the history underlying Maxell’s relationship
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`with Hitachi, an accurate explanation is necessary. For many years, Hitachi and Hitachi Maxell,
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`Ltd. (“HMX”) enjoyed a close relationship. HMX was a wholly owned subsidiary of Hitachi,
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`and the companies developed, manufactured and sold a wide array of consumer electronic
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`devices. In 2013, HMX purchased the consumer electronics business from Hitachi. As part of the
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`purchase, HMX obtained Hitachi’s smartphone patent portfolio, which was previously held by
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`Hitachi Consumer Electronics Co., Ltd. (“HCE”), one of Hitachi’s wholly owned subsidiaries.
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`At that time, HCE transferred to HMX its files related to the assigned patents, which
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`included prosecution materials, prior licenses, and licensing negotiation materials. The materials
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`1 Apple has been aware of Hitachi’s refusal to respond since at least September 20, 2019. Yet, Apple did not move
`for issuance of letters of request for international judicial assistance to obtain materials from Hitachi until over two
`months later, on November 27, 2019. D.I. 146. To the extent Apple claims there is insufficient time to obtain
`discovery from Hitachi in this way, the timing issue is of Apple’s own making.
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`Case 5:19-cv-00036-RWS Document 170 Filed 12/23/19 Page 3 of 11 PageID #: 7626
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`were later assigned to Maxell.2 Hitachi/HCE identified the relevant materials to be transferred as
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`part of the assignment. There was incentive for the parties to work together at that time to ensure
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`a smooth transition, including with respect to ongoing business negotiations initiated by
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`Hitachi/HCE. To that end, Hitachi appointed an employee, Mr. Matsuo, to work with HMX for a
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`time following the assignment, and to assist HMX’s efforts in licensing the smartphone portfolio.
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`Maxell had no reason to doubt that all relevant materials had been provided by Hitachi/HCE.
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`Ultimately, Hitachi sold its shares in HMX, reducing its ownership stake from 100%
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`down to about 3%. Thereafter, HMX reorganized and dropped Hitachi from its name, Mr.
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`Matsuo’s work with HMX ended, and the parties operated entirely independently of one another.
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`At no time since the companies parted ways has Maxell been able to demand documents from
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`Hitachi. Even in connection with its prior litigations, where additional information regarding
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`early license agreements could have supported Maxell’s case, Maxell could not, and did not,
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`obtain such information from Hitachi.
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`II.
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`ARGUMENT
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`Maxell is not attempting to get the best of both worlds. Maxell received documents from
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`Hitachi in 2013, and that is what it produced in this case. Maxell has no ability to demand
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`additional documents from Hitachi, regardless of whether they may be helpful or hurtful to
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`Maxell’s positions.
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`A.
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`Hitachi Documents Are Not Within Maxell’s Possession, Custody, or
`Control.
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`Maxell has never disputed that a party’s discovery obligations extend beyond materials in
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`its physical possession to those also within its control. Rather, Maxell disputes Apple’s assertion
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`2 In 2017, through reorganization and to better reflect its relationship with Hitachi, HMX became Maxell Holdings,
`Ltd. by way of a name change. HMX assigned, transferred, and conveyed assets to plaintiff Maxell (a wholly owned
`subsidiary of Maxell Holdings, Ltd.), including the portfolio and related materials. The dispute before the Court
`relates to the 2013 transfer of materials from Hitachi to HMX/Maxell, not the 2017 transfer from HMX to Maxell.
`2
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`Case 5:19-cv-00036-RWS Document 170 Filed 12/23/19 Page 4 of 11 PageID #: 7627
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`that Hitachi documents are somehow within Maxell’s control. The documents Apple seeks are
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`outside of Maxell’s control. No fact demonstrates this more clearly than that Maxell has already
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`requested materials from Hitachi on Apple’s behalf in this case. Ex. A. Maxell directed the letter
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`to Mr. Matsuo, who was familiar with the subject patent portfolio, to ensure that the request was
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`immediately directed to the correct persons within Hitachi. Id. Hitachi, however, never
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`responded. Miller Decl. at ¶2.
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`Hitachi’s non-response is not surprising. Though Hitachi and Maxell previously enjoyed
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`a close relationship, that relationship has disintegrated. Whereas Maxell’s predecessor (HMX)
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`was a wholly owned subsidiary of Hitachi, Hitachi now owns only 3% of Maxell’s parent’s
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`stock. And whereas Hitachi previously appointed Mr. Matsuo to assist Maxell in the transition,
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`that relationship has ended and Mr. Matsuo no longer performs work with Maxell. While the
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`prior relationship between the companies may have supported a finding of control in the past, the
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`current facts do not. The question before the Court is whether the requested materials are within
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`Maxell’s control now, not years ago.
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`Maxell and Hitachi are separate companies. Apple has not shown otherwise. Apple
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`instead argues control is evident because Hitachi owns 3% of Maxell’s parent’s stock. That is not
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`evidence of control. Maxell’s 2019 Integrated Report shows that the following entities held more
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`Maxell stock than Hitachi as of April 1, 2019: Japan Trustee Services Bank (12.9%), Master
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`Trust Bank of Japan (6.72%), BNP Paribas Securities Services Singapore (5.8%), Minami
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`Aoyama Real Estate (5.6%), SSBTC Client Omnibus Account (4.92%), Taiyo Hanei Fund, L.P.
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`(3.79%), Nichi Corp. (3.79%), and State Street Bank and Trust Company (3.65%). Miller Decl.
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`¶4. Under Apple’s logic, Maxell has control over all documents held by any of these entities, and
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`Apple could demand Maxell produce materials even from Japan Trustee Services Bank.
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`Case 5:19-cv-00036-RWS Document 170 Filed 12/23/19 Page 5 of 11 PageID #: 7628
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`Apple has not identified any currently overlapping directors, officers, or employees.
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`Indeed, the two companies do not share any directors or executive officers. See Miller Decl. ¶8
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`(comparing Maxell and Hitachi IR Reports). The only overlapping employee Apple identified is
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`Mr. Matsuo, whose work with HMX terminated prior to the complaint in this case. Id. at ¶3.
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`Even if ongoing, this prior appointment would not give Maxell complete control over Hitachi,
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`particularly not in perpetuity.
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`Apple has not shown any exchange of documents between Hitachi and Maxell in the
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`ordinary course of business that bear any relation whatsoever to the requested materials. The
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`press release Apple cites states only that Hitachi Europe Ltd. has announced that its Digital
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`Media Group will partner with Maxell to distribute Maxell’s new range of maintenance-free
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`Laser and LED
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`light
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`source projectors.”3 https://www.displaydaily.com/article/press-
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`releases/maxell-appoints-hitachi-to-launch-its-new-projectors-in-spring-2019. The press release
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`does not establish the free exchange of documents between Hitachi and Maxell, and it certainly
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`does not establish an exchange of documents related to Maxell’s smartphone portfolio. If this
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`gives Maxell control over all Hitachi documents, then any joint effort between two entities
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`would confer such rights. Apple would then have control over all documents of any of its
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`business partners—something Apple obviously disputes for itself as it refuses to produce
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`documents even from its suppliers. Apple also has not shown that the MOU supports the
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`exchange of documents. The portions cited by Apple refer to provision of sublicensing rights or
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`personnel support.
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`Although Hitachi was involved in the prosecution and licensing of several asserted
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`patents, Apple has not shown that Hitachi has participated in licensing negotiations with Apple
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`regarding the smartphone patent. Nor has Apple shown that Hitachi stands to benefit from this
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`3 This press release does not state the projectors would be sold under the Hitachi brand name, as Apple represents.
`4
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`Case 5:19-cv-00036-RWS Document 170 Filed 12/23/19 Page 6 of 11 PageID #: 7629
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`litigation (apart from having a 3% stake in Maxell Holdings).
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`Finally, Apple has not shown that Hitachi is involved in this or related litigations—
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`because it is not. Maxell reached out to inventors and to Mr. Matsuo directly to try to make them
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`available for deposition in connection with the litigations. Hitachi played no part in such efforts.
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`The current facts are similar to ones Apple previously faced in Cellular Communications
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`Equipment LLC v. AT&T Inc., et al., in which Apple moved to compel the plaintiff CCE to
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`obtain and produce documents from the prior-owner of the asserted patents, NSN. C.A. 2:15-cv-
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`00576, 2017 WL 2306074, at *1 (E.D. Tex. May 25, 2017). Apple argued that CCE had control
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`over the requested documents by virtue of a provision in the Patent Purchase Agreement (PPA)
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`whereby NSN sold the asserted patents to CCE’s parent company. Id. at *2. The Court found,
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`however, that CCE had already requested the materials from NSN, and NSN refused to provide
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`the requested documents. Id. Given that CCE had already unsuccessfully requested the materials
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`from NSN, the Court stated it was “unsure of what more CCE could do” and denied Apple’s
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`motion.4 Id. at *2-3. Maxell similarly requested materials from Hitachi, which request went
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`unanswered. Thus, the conclusion reached in CCE should also be reached here.
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`B.
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`The Requested Materials Are Not Relevant.
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`Apple’s statement that Maxell does not dispute the relevance of prior communications
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`related to
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` is demonstrably false. In Exhibit 4 to
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`Apple’s Motion, a letter from Maxell’s counsel, Maxell stated the following:
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`Given that the parties are arguing over two separate and distinct negotiations, it is
`wholly appropriate for Maxell to take the position that the 2013 meeting regarding
`licensing of the smartphone portfolio is relevant to its willfulness claims while
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`Mot. at Ex. 4 (emphasis added). Maxell similarly stated in an earlier letter “Maxell does dispute
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`4 The Court also found that there was no evidence CCE was attempting to use NSN as both a sword and a shield or
`that NSN had a financial interest in the litigation. Those facts, too, align with those presently before the Court.
`5
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`Case 5:19-cv-00036-RWS Document 170 Filed 12/23/19 Page 7 of 11 PageID #: 7630
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`the relevance of the communications that you appear to be referencing (i.e.,
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`).” Miller Decl. ¶6 (emphasis in original). Maxell stands by this
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`position.
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`Maxell’s knowledge of the
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`s is limited to its counsel’s review of
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`materials Apple produced.5 Such review has shown the negotiations to be irrelevant. The
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`. Moreover, the negotiations were
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`held
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`See Apple Mot. to Transfer (D.I. 057) at 7. Thus, even if the parties wanted to rely on such
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`negotiations for purposes of willfulness, they could not (and Maxell does not).
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`Furthermore, based on Apple’s production, it appears that
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`negotiations would also not be relevant to the issues of damages, infringement, or validity. Given
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`the foregoing, the
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` are not relevant to any claim or defense in this case.
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`Maxell does not dispute the relevance of prior licenses, generally, and produced all prior
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`licenses of which it was aware and had control. The relevance of the
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`agreements to the current litigation is minimal. Apple suggests that the
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` are case dispositive because they somehow render Apple’s accused products licensed.
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`They are not, and they do not. To render Apple’s accused products licensed, the licensed
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` and produced the documents exchanged as part of that
`5 Apple was directly involved in the
`negotiation. Apple is already in possession of the non-privileged materials related to the negotiations; it is unclear
`why Apple moves to compel production of the materials by Maxell, which was not a party to the negotiations.
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`Case 5:19-cv-00036-RWS Document 170 Filed 12/23/19 Page 8 of 11 PageID #: 7631
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`components would have to embody essential features of the asserted patents.6 Quanta Computer,
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`Inc. v. LG Elecs., Inc., 553 U.S. 617, 630-635 (2008). They do not. Every assertion of
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`infringement in this case implicates numerous components that must work together to achieve
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`the infringing feature or functionality. This is evidenced by, for example, Maxell’s response to
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`Apple’s interrogatory seeking identification of the SSPPU for each asserted patent. For each
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`patent, Maxell responded in part by identifying a list of implicated components. Miller Decl. at
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`¶5. There is not a single patent for which Maxell identified only a single component. Id.
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`The licenses are even less relevant to issues outside of Apple’s licensing defense. The
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`Miller Decl. at ¶7. As Apple itself states, the agreements
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`. Given these two facts, it would be highly unlikely for any expert to find these licenses
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`instructive on the issue of damages, particularly when newer licenses that apply specifically to
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`devices similar to the Accused Products have been produced.
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` However relevant, Maxell does not have any such documents, and its request to Hitachi
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`was ignored. This is in stark contrast to Apple’s own behavior where it unquestionably has
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`relevant materials within its possession and has either refused or delayed production.
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`III. CONCLUSION
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`Apple did not meet its burden to establish Maxell has control over Hitachi’s documents.
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`Moreover, given that Maxell already requested the materials from Hitachi, granting Apple’s
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`motion would be without effect. Accordingly, Apple’s motion should be denied.
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`By:
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`/s/ Jamie B. Beaber
`Geoff Culbertson
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`Dated: December 19, 2019
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`6 Maxell anticipates this issue will ultimately be the subject of summary judgement. Thus, Maxell provide only a
`high-level overview of its argument to show that Apple’s suggestion of importance is not clear-cut by any means.
`7
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`Case 5:19-cv-00036-RWS Document 170 Filed 12/23/19 Page 9 of 11 PageID #: 7632
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`Kelly Tidwell
`Patton, Tidwell & Culbertson, LLP
`2800 Texas Boulevard (75503)
`Post Office Box 5398
`Texarkana, TX 75505-5398
`Telephone: (903) 792-7080
`Facsimile: (903) 792-8233
`gpc@texarkanalaw.com
`kbt@texarkanalaw.com
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`Jamie B. Beaber
`Alan M. Grimaldi
`Kfir B. Levy
`James A. Fussell, III
`Baldine B. Paul
`Tiffany A. Miller
`Saqib J. Siddiqui
`Bryan C. Nese
`William J. Barrow
`Alison T. Gelsleichter
`Clark S. Bakewell
`MAYER BROWN LLP
`1999 K Street, NW
`Washington, DC 20006
`Telephone: (202) 263-3000
`Facsimile: (202) 263-3300
`jbeaber@mayerbrown.com
`agrimaldi@mayerbrown.com
`klevy@mayerbrown.com
`jfussell@mayerbrown.com
`bpaul@mayerbrown.com
`tmiller@mayerbrown.com
`ssiddiqui@mayerbrown.com
`bnese@mayerbrown.com
`wbarrow@mayerbrown.com
`agelsleichter@mayerbrown.com
`cbakewell@mayerbrown.com
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`Robert G. Pluta
`Amanda Streff Bonner
`Mayer Brown LLP
`71 S. Wacker Drive
`Chicago, IL 60606
`(312) 782-0600
`rpluta@mayerbrown.com
`asbonner@mayerbrown.com
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`Case 5:19-cv-00036-RWS Document 170 Filed 12/23/19 Page 10 of 11 PageID #: 7633
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`Counsel for Plaintiff Maxell, Ltd.
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`Case 5:19-cv-00036-RWS Document 170 Filed 12/23/19 Page 11 of 11 PageID #: 7634
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`CERTIFICATE OF SERVICE
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`The undersigned certifies that all counsel of record who are deemed to have consented to
`electronic service are being served this 19th day of December, 2019, with a copy of this
`document via electronic mail.
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`/s/ Jamie B. Beaber
`Jamie B. Beaber
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`CERTIFICATE OF AUTHORIZATION TO FILE UNDER SEAL
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`The undersigned certifies that the foregoing document is authorized to be filed under seal
`pursuant to the Protective Order entered in this case.
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`/s/ Jamie B. Beaber
`Jamie B. Beaber
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