Case 5:19-cv-00036-RWS Document 238 Filed 03/23/20 Page 1 of 20 PageID #: 9266
`
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`TEXARKANA DIVISION
`
`MAXELL, LTD.,
`
`
`
`Plaintiff
`
`Civil Action NO. 5:19-cv-00036-RWS
`
`v.
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`APPLE INC.,
`
`
`
`JURY TRIAL DEMANDED
`
`
`
`
`Defendant.
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`
`
`
`
`APPLE INC.’S RESPONSE TO
`MAXELL, LTD.’S MOTION FOR SANCTIONS
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`
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`
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`TEXARKANA DIVISION
`
`MAXELL, LTD.,
`
`
`
`Plaintiff
`
`Civil Action NO. 5:19-cv-00036-RWS
`
`v.
`
`APPLE INC.,
`
`
`
`JURY TRIAL DEMANDED
`
`
`
`
`Defendant.
`
`
`
`
`
`APPLE INC.’S RESPONSE TO
`MAXELL, LTD.’S MOTION FOR SANCTIONS
`
`
`
`
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`Case 5:19-cv-00036-RWS Document 238 Filed 03/23/20 Page 2 of 20 PageID #: 9267
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`TABLE OF CONTENTS
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`Page
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`INTRODUCTION ............................................................................................................. 1
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`BACKGROUND ............................................................................................................... 2
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`A.
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`B.
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`Apple Faithfully Complied With Its Discovery
`Obligations Despite Maxell’s Refusal To Do The Same ....................................... 2
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`Apple’s Diligently Produced Documents And Source Code
`Despite Maxell’s Refusal to Engage in Good Faith Discovery ............................. 3
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`LEGAL STANDARD ........................................................................................................ 7
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`ARGUMENT ..................................................................................................................... 7
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`A.
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`B.
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`C.
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`Apple Complied with Patent Rule 3-4 ................................................................... 7
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`Apple Substantially Completed Its Production
`By November 27, and Maxell Is Owed Nothing for
`Prematurely Declaring Fact Discovery Closed ...................................................... 8
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`Maxell Has Suffered No Prejudice and Its Effort to Broadly
`Declare Products to be “Representative” Is Without Merit ................................. 15
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`I.
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`II.
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`III.
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`IV.
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`Case 5:19-cv-00036-RWS Document 238 Filed 03/23/20 Page 3 of 20 PageID #: 9268
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`TABLE OF AUTHORITIES
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`Page(s)
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`Cases
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`B. F. Goodrich Tire Co. v. Lyster,
`328 F.2d 411 (5th Cir. 1964) ...................................................................................................... 7
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`Cochran Consulting, Inc. v. Uwatec USA, Inc.,
`102 F.3d 1224 (Fed. Cir. 1996) ............................................................................................. 2, 7
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`Dallas Fallen Officer Found. v. Frazier,
`No. 4:18-CV-00481, 2019 WL 4256958 (E.D. Tex. Sept. 9, 2019) ........................................... 9
`
`Delphix Corp. v. Actifio, Inc.,
`No. 13CV04613BLFHRL, 2015 WL 5693722 (N.D. Cal. Sept. 29, 2015) ............................... 8
`
`E.g., Price v. Synapse Grp., Inc.,
`No. 16CV1524, 2018 WL 9517276 (S.D. Cal. Sept. 12, 2018) ................................................. 1
`
`Edward D. Ioli Tr. v. Avigilon Corp.,
`No. 2:10-CV-605-JRG, 2012 WL 5830711 (E.D. Tex. Nov. 16, 2012) .................................... 8
`
`Joseph v. Signal Int’l L.L.C.,
`No. 1:13-CV-324, 2015 WL 12777228 (E.D. Tex. Mar. 17, 2015) ........................................... 9
`
`KlausTech, Inc. v. Google, Inc.,
`No. 10CV05899JSWDMR, 2017 WL 4808558 (N.D. Cal. Oct. 25, 2017) ............................... 7
`
`TQP Dev., LLC v. Merrill Lynch & Co.,
`No. 2:08-CV-471-WCB, 2012 WL 13050554 (E.D. Tex. July 18, 2012) .................................. 7
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`Case 5:19-cv-00036-RWS Document 238 Filed 03/23/20 Page 4 of 20 PageID #: 9269
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`I.
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`INTRODUCTION
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`Maxell’s motion for sanctions is the culmination of its plan to weaponize discovery in
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`this case. Far from using it as a legitimate fact-finding tool, Maxell has, from the beginning,
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`aimed its discovery at the drastic relief it now seeks: forcing Apple, by hook or by crook, to
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`lessen Maxell’s own burden of proving infringement of 301 implicated claims across 10 patents,
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`more than 120 accused products, and 19 operating systems. This effort began early in this case,
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`when Maxell filed its first motion to compel and asserted that Apple was to have produced every
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`responsive document in the company just over three months after the case was filed. D.I. 56.
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`The Court rightly rejected that as “unreasonable.” D.I. 126 at 3. Undeterred, Maxell continued
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`to apply to Apple a scope of discovery that it would not even apply to itself: Apple must turn
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`over every rock in the company to produce “responsive” information. But there is no such
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`scorched-earth requirement. E.g., Price v. Synapse Grp., Inc., No. 16CV1524, 2018 WL
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`9517276, at *7 (S.D. Cal. Sept. 12, 2018) (a reasonable search does not require defendants to
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`“interview every employee” to identify documents not otherwise discovered).
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` To state that again—because it merits
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`emphasis—compared to the 700+ patent cases Apple has been in over the last decade—small
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`cases and big cases, against competitors and NPEs, in this district and in others, involving a
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`single patent or more than a dozen—this case rises to the top. Yet Apple has never been able to
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`satisfy Maxell’s voracious appetite. And for months Maxell avoided providing meaningful
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`1 Including the 20 asserted claims and the claims on which they depend.
`2 A source code “project” is a unit of organization for individual source code files.
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`1
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`Case 5:19-cv-00036-RWS Document 238 Filed 03/23/20 Page 5 of 20 PageID #: 9270
`Case 5:19-cv-OOO36-RWS Document 238 Filed 03/23/20 Page 5 of 20 PageID #: 9270
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`source code contentions by serially claiming that Apple had not yet produced “critical”
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`documents and source code and now boldly claims—without evidence—that Apple has been
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`“withholding” them. But Maxell’s actions leading up to this motion, as well as its actions since,
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`confum that Maxell’s plan, all along, was for its own strategic advantage:
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`o Maxell refused to withdraw this motion even though the prejudice it vaguely
`complains of—insufficient time, documents, and source code in hand to prepare
`for depositions and expert reports—was eliminated by the schedule change
`regarding COVID—l9. D1. 231.
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`While Apple has never refused to produce a single technical docmnent or source code file
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`that it has been able to locate, Maxell asserts that the Comt should still sanction Apple because it
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`did not finish addressing Maxell’s serial, goal-post-moving demands by a date (plucked from
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`thin air) two months before fact discovery originally closed. But Maxell’s motion betrays its tnle
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`motive: forcing a premature representative products agreement to ease Maxell’s burden, while
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`avoiding the merits and raising Apple’s costs with each manufactured discovery dispute.
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`Sanctions should “deter others who would otherwise be inclined to plu'sue similar behavior,”
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`Cochran Consulting, Inc. v. Uwatec USA, Inc, 102 F.3d 1224, 1232 (Fed. Cir. 1996), but here
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`sanctions would only encourage Maxell’s bad faith strategy of self-help.
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`II.
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`BACKGROUND
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`A.
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`Apple Faithfully Complied With Its Discovery
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`Obligations Despite Maxell’s Refusal To Do The Same
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`
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`Case 5:19-cv-00036-RWS Document 238 Filed 03/23/20 Page 6 of 20 PageID #: 9271
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`contentions lacked specificity.
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` While broadly alleging infringement, Maxell’s
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` But Apple had to successfully move to compel such contentions.
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`types of documents should be produced, Maxell never identified any material deficiency to its
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` Notably, besides complaining that other
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`ability to sufficiently understand the accused functionalities.
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`B.
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`Apple’s Diligently Produced Documents And Source Code
`Despite Maxell’s Refusal to Engage in Good Faith Discovery
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`Case 5:19-cv-00036-RWS Document 238 Filed 03/23/20 Page 7 of 20 PageID #: 9272
`Case 5:19-cv-OOO36-RWS Document 238 Filed 03/23/20 Page 7 of 20 PageID #: 9272
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`needed relief fi'om the Corut, which it eventually got, only to be faced with a motion from
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`Maxell trying to further evade its obligation to give Apple the source code contentions it was
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`owed. m——
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`Apple
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`Maxell then continued its strategy of identifying a never-ending list of “deficiencies” of
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`documents and source code production to avoid providing compliant infringement contentions.
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`Each time Apple thought it had satisfied Maxell, notwithstanding the irrelevance of its requests,
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`Maxell moved the goalposts and identified more pinpofied deficiencies. But much of the
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`discovery Maxell has requested has only a remote (if any) connection to Maxell’s infringement
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`contentions, and appears to Apple to have been requested only to increase Apple’s burden and its
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`cost of litigating this case, and to distract Apple from the men'ts of the case. This includes, for
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`example, source code that Maxell demanded (and used as an excuse to delay its infringement
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`w
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`AI
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`Case 5:19-cv-00036-RWS Document 238 Filed 03/23/20 Page 8 of 20 PageID #: 9273
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`contentions), which is now tellingly absent from Maxell’s court ordered supplemental
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`infringement contentions. See, e.g., Ex. 5, 12/18/19 Ltr. at 7-8; Zhou ¶¶ 13-21. But Apple’s
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`efforts to discuss with Maxell the necessity and proportionality of its stream of additional
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`requests were met with the same response: an unwavering demand for every document and
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`every line of code that Maxell claimed had even a tangential relation to the accused functionality.
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`While Apple maintained (and still maintains) that Maxell’s serial demands were for largely
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`irrelevant information, it nonetheless has produced, and continues to produce, every document
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`and code that Maxell has demanded that it can find.
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`Another example of Maxell’s unreasonable demands is its insistence that Apple produce
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`third-party datasheets for all components of the accused products that Maxell says are relevant
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`because they, in some way, are implicated by the accused functionality. But Maxell tacitly
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`concedes that these component datasheets are largely irrelevant, agreeing that it only identified
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`“some” of these components in its infringement contentions. Mot. at 5. In fact, Maxell’s
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`infringement contentions nowhere mention most of the components for which Maxell has
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`demanded datasheets.
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`In an effort to end Maxell’s piecemeal approach to raising alleged deficiencies, Apple
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`4 Maxell’s claim that it could not identify Apple’s third party suppliers until after November
`2019 (Mot. at 5 n.6) is belied by the fact it served 13 subpoenas on Apple suppliers before then
`and by the fact that Apple lists its top 200 suppliers, publicly, on its website
`(https://www.apple.com/supplier-responsibility/pdf/Apple-Supplier-List.pdf).
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`5
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`Case 5:19-cv-00036-RWS Document 238 Filed 03/23/20 Page 9 of 20 PageID #: 9274
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`sent Maxell a letter and chart in January detailing the status of all source code issues that Maxell
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`had raised. Ex. 6, 1/31/20 Ltr. at A:1-6.
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`As Apple explained in response, Maxell never engaged in any good faith efforts to
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`resolve these issues. D.I. 205 at 7.
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`5 Apple produced these documents anyway.
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`6
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`Case 5:19-cv-00036-RWS Document 238 Filed 03/23/20 Page 10 of 20 PageID #: 9275
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`III. LEGAL STANDARD
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`Sanctions are only appropriate when “just,” “related to the particular claim at issue,” and
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`“meet the judicial goal of punishing the errant party in order to deter others who would otherwise
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`be inclined to pursue similar behavior.” Cochran, 102 F.3d at 1232. Good faith “is relevant to
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`the orders which should be given and the severity of the sanctions.” B. F. Goodrich Tire Co. v.
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`Lyster, 328 F.2d 411, 415 (5th Cir. 1964); see also TQP Dev., LLC v. Merrill Lynch & Co., No.
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`2:08-CV-471-WCB, 2012 WL 13050554, at *7 (E.D. Tex. July 18, 2012) (“a court should not
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`exercise its inherent powers to impose sanctions unless ‘bad faith is specifically found’”).
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`IV. ARGUMENT
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`Maxell’s motion is rife with allegations that Apple has “withheld” documents. But
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`Maxell does not, and cannot, cite any instances of Apple actually withholding documents or of
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`any of the other “discovery abuses” of which it complains. Rather, Maxell premises its entire
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`motion on the (incorrect) notion that Apple was required to produce all of its documents and all
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`of its source code that was in any way connected to the Accused Products more than two months
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`before fact discovery closed. This mudslinging not enough for sanctions and none of the
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`sanctions Maxell seeks are warranted.
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`A.
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`Apple Complied with Patent Rule 3-4
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` Ex. 2, 9/24/19 Ltr. at 1; see
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`KlausTech, Inc. v. Google, Inc., No. 10CV05899JSWDMR, 2017 WL 4808558, at *5 (N.D. Cal.
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`Oct. 25, 2017) (P.R. 3-4 production “included sufficient information about the [the accused
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`feature] . . ., all of which should have prompted [plaintiff] to conduct further targeted discovery
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`about precisely how these elements function in the AdMob system if [plaintiff] needed
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`7
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`Case 5:19-cv-00036-RWS Document 238 Filed 03/23/20 Page 11 of 20 PageID #: 9276
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`clarification”). Apple’s considerable P.R. 3-4 production is, thus, readily distinguishable from
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`the cases cited by Maxell, where a defendant had only produced “362 pages of documents” and
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`no source code whatsoever, see Edward D. Ioli Tr. v. Avigilon Corp., No. 2:10-CV-605-JRG,
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`2012 WL 5830711, at *1 (E.D. Tex. Nov. 16, 2012), or sought to rely entirely on source code
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`and a few (mostly) public documents, see Delphix Corp. v. Actifio, Inc., No.
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`13CV04613BLFHRL, 2015 WL 5693722, at *3 (N.D. Cal. Sept. 29, 2015).
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`B.
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`Apple Substantially Completed Its Production By November 27, and
`Maxell Is Owed Nothing for Prematurely Declaring Fact Discovery Closed
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`There is no dispute that Apple has not refused to produce any technical document or
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`source code file it can find, regardless of how irrelevant it is. Indeed, at Maxell’s request, Apple
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`has produced countless documents and source code projects that have only the most marginal, if
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`any, relation to Maxell’s infringement contentions.
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`8
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`Case 5:19-cv-00036-RWS Document 238 Filed 03/23/20 Page 12 of 20 PageID #: 9277
`Case 5:19-cv-OOO36-RWS Document 238 Filed 03/23/20 Page 12 of 20 PageID #: 9277
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`Unsmprisingly. Maxell cites no an authority to sanction Apple for not fully completing
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`all document discovery by a deadline that Maxell just made up two months before the actual
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`close of fact discovery and refreshingly has admitted it has no basis for such an arglunent. -
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`— Given the volume
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`of discovery that Apple has already produced, the number of products and features accused, and
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`the serial nature of Maxell’s requests. it should come as no surprise that Apple is continuing to
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`supplement its discovery production—within the fact discovery period. This does not justify
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`sanctions. Dallas Fallen Oflicer Found. v. Frazier, No. 4: 18-CV-00481, 2019 WL 4256958, at
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`*4 (ED. Tex. Sept. 9, 2019) (declining to impose sanctions for documents produced in the
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`course of depositions and “within the time for discovery”).—
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`Sanctions would be particularly unjust here, where Maxell made the strategic decision to
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`avoid constructive dialogue and obfuscate its demands. See, e.g., Joseph v. Signal Int’l L.L.C..
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`No. 1:13-CV-324. 2015 WL 12777228. at *2 (ED. Tex. Mar. 17, 2015) (denying sanctions
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`against a party where it did not “bear the sole responsibility for the late production of
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`documents”) (emphasis in original). This is not a case of a party defying an order to produce a
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`document or category of documents. Rather. Maxell complains that Apple did not complete all
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`of its production by November 27, including in response to Maxell’s post—November 27 requests.
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`As set forth below, none of Maxell’s examples come close to being sanctionable.
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`Case 5:19-cv-00036-RWS Document 238 Filed 03/23/20 Page 13 of 20 PageID #: 9278
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`Case 5:19-cv-00036-RWS Document 238 Filed 03/23/20 Page 18 of 20 PageID #: 9283
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`C. Maxell Has Suffered No Prejudice and Its Effort to Broadly Declare
`Products to be “Representative” Is Without Merit
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`Maxell’s alleged prejudice—insufficient time to prepare for fact depositions and expert
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`reports—is provably false, even absent the recent extension.
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` Second, when Maxell requested a delay of
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`depositions and expert reports in view of the COVID-19 outbreak, thereby providing additional
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`time to prepare for both, Maxell refused to withdraw this motion. D.I. 231, 232. Maxell’s
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`refusal makes its true aim clear—forcing Apple into a representative products stipulation.
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`sanctions are, thus, not only without basis, but technically incorrect.
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` Maxell’s proposed
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`Case 5:19-cv-00036-RWS Document 238 Filed 03/23/20 Page 19 of 20 PageID #: 9284
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`March 19, 2020
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`/s/ Luann L. Simmons
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`
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`Luann L. Simmons (Pro Hac Vice)
`lsimmons@omm.com
`O’MELVENY & MYERS LLP
`Two Embarcadero Center
`28th Floor
`San Francisco, CA 94111
`Telephone: 415-984-8700
`Facsimile: 415-984-8701
`
`Xin-Yi Zhou (Pro Hac Vice)
`vzhou@omm.com
`O’MELVENY & MYERS LLP
`400 S. Hope Street
`Los Angeles, CA 90071
`Telephone: 213-430-6000
`Facsimile: 213-430-6407
`
`Laura Bayne Gore (Pro Hac Vice)
`lbayne@omm.com
`O’MELVENY & MYERS LLP
`Times Square Tower, 7 Times Square
`New York, NY 10036
`Telephone: 212-326-2000
`Facsimile: 212-326-2061
`
`Melissa R. Smith (TX #24001351)
`melissa@gilliamsmithlaw.com
`GILLIAM & SMITH, LLP
`303 South Washington Avenue
`Marshall, Texas 75670
`Telephone: (903) 934-8450
`Facsimile: (903) 934-9257
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`Attorneys for Defendant Apple Inc.
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`16
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`Case 5:19-cv-00036-RWS Document 238 Filed 03/23/20 Page 20 of 20 PageID #: 9285
`Case 5:19-cv-OOO36-RWS Document 238 Filed 03/23/20 Page 20 of 20 PageID #: 9285
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`CERTIFICATE OF SERVICE
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`The undersigned hereby certifies that all counsel of record who are deemed to have
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`consented to electronic service are being served with a copy of this docmnent via the Coufl's
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`CM/ECF system per Local Rule CV—5(a)(3) on March 19, 2020.
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`/s/ Melissa R. Smith
`
`Melissa R. Smith
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`17
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