Cochran Consulting, Inc. v. Uwatec USA, Inc.

Decision Date17 December 1996
Docket Number96-1209,Nos. 96-1145,s. 96-1145
PartiesCOCHRAN CONSULTING, INC., Plaintiff-Appellee, v. UWATEC USA, INC., and Uwatech AG, Defendants-Appellants, and Ocean's Window, Incorporated, Defendant.
CourtU.S. Court of Appeals — Federal Circuit

James D. Petruzzi, Mason & Petruzzi, Dallas, TX, argued, for plaintiff-appellee. With him on the brief was Robert M. Mason.

Richard L. Schwartz, Akin, Gump, Strauss, Hauer & Feld, L.L.P., Dallas, TX, argued, for defendants-appellants.

Before NEWMAN, LOURIE, and RADER, Circuit Judges.

PAULINE NEWMAN, Circuit Judge.

This suit for patent infringement was brought by Cochran Consulting, Inc., against Uwatec USA, Inc., its Swiss parent company Uwatec AG, and Ocean's Window, Inc., a distributor resident in the judicial district. The District Court for the Eastern District of Texas ordered the defendants Uwatec AG and Uwatec USA to produce a printed copy of the computer programming (ROM) code that is used in the accused device, Uwatec's scuba dive parameter indicator, and imposed sanctions for their failure to do so. 1

The Uwatec companies did not own or possess or control the ROM code, and were unable to obtain it or cause its production in the Texas litigation although Uwatec AG brought suit for this purpose in Switzerland against Dynatron, Inc., the owner of the code. Further, the ROM code is unnecessary to prove infringement of the patented invention. On these facts the district court's orders and sanctions were contrary to United States jurisprudence and the Federal Rules of Evidence, as well as in violation of principles of international comity.

DISCUSSION

The discovery demand was for a printed copy of the ROM code. The ROM code is the programmer's translation of the electronic operation of a device into computer language. During his deposition Markus Mock of Dynatron testified that the code had never been printed, and that the printed form would probably fill more than a thousand pages.

The patent in suit, United States Patent No. 4,999,606 (the '606 patent), does not require, or its specification disclose, any particular ROM code. The '606 patent states only that read only memory (ROM) is one source of memory in the dive indicator; it contains none of the ROM programming such as is here sought by discovery. The entire content of the patent concerning the ROM code is the following sentence:

The memory may comprise a read only memory (ROM) and a random access memory (RAM) to not only enable storage of information relating to dive tables but to also enable ancillary calculations to be carried out or to store information such as surface interval duration between dives, bottom time water temperature and depth attained in a dive for example.

'606 patent, col. 3, lines 24-30.

The '606 invention is not an invention of software programming: it is an invention of a scuba indicator device for divers, having specified mechanical and electronic components and performing specified functions, as set forth in Claim 1:

1. An underwater transmitter/receiver assembly for use with a self-contained underwater breathing apparatus including a breathing gas tank and a diver's face mask, the assembly comprising:

transmitting circuit means attachable to said tank and including sensor means for providing output signals indicative of variable actual dive parameters, a modulator modulating said output signals, and a transmitting circuit propagating a modulated means providing information on variable dive parameters to an individual diver wearing said face mask, said information providing means being attachable to the diver and including a receiver circuit which is physically disconnected from said transmitting circuit means and receives therefrom said modulated carrier wave, and a demodulator for demodulating said carrier wave; and

carrier wave representative of a respective one of said output signals;

a display device providing to the diver a visual display indicative of a respective variable dive parameter.

The presence of the claim elements and the performance of the claim functions does not depend on the use of any particular ROM code, and infringement is not proved by reference to the ROM code. The demanded discovery is unnecessary to the cause of the plaintiff Cochran in the Texas court. The context and need must be considered when resolving conflict that arises when foreign laws impinge upon discovery demands under the Federal Rules of Evidence.

THE CONFLICT OF LAWS

It is well known that the laws of some foreign countries present conflicts with or obstacles to United States discovery demands. The Supreme Court considered the law of Switzerland in Societe Internationale Pour Participations Industrielles et Commerciales, S.A. v. Rogers, 357 U.S. 197, 78 S.Ct. 1087, 2 L.Ed.2d 1255 (1958), wherein the Swiss plaintiff was unable to produce certain records requested by the defendant (Rogers was the United States Attorney General, successor to the Alien Property Custodian) because the Swiss government had directly interdicted their disclosure. The district court had dismissed the action, as sanction for the Swiss plaintiff's non-production of the documents located in Switzerland. The Supreme Court held that dismissal was inappropriate since Societe Internationale had attempted in good faith to produce the documents, and indeed had produced many but not all of those requested. The Court observed that the Swiss company was not seeking special privileges, and that it had made full efforts to comply with the discovery requests:

Petitioner has sought no privileges because of its foreign citizenship which are not accorded domestic litigants in United States courts. It does not claim that Swiss laws protecting banking records should here be enforced. It explicitly recognizes that it is subject to procedural rules of United States courts in this litigation and has made full efforts to follow these rules. It asserts no immunity from them. It asserts only its inability to comply because of foreign law.

Societe Internationale, 357 U.S. at 211-12, 78 S.Ct. at 1095-96 (emphasis in original) (citing Guaranty Trust Co. of New York v. United States, 304 U.S. 126, 133-35, 58 S.Ct. 785, 789-90, 82 L.Ed. 1224 (1938)). The Court stated that:

[F]ear of criminal prosecution constitutes a weighty excuse for non-production, and this excuse is not weakened because the laws preventing compliance are those of a foreign sovereign.

Societe Internationale, 357 U.S. at 211, 78 S.Ct. at 1095. The Court held that all considerations must be weighed, in determining whether the non-production would be excused.

Applying these principles to the case at bar, Uwatec sought no special privileges because of its foreign citizenship. It made appropriate efforts to comply with the discovery demand, made demand of the Swiss owner of the ROM code, and brought suit in Switzerland for the purpose of obtaining and producing the ROM code. Uwatec asserted only its "inability to comply because of foreign law," Societe Internationale, 357 U.S. at 212, 78 S.Ct. at 1096, not that it was immune from compliance with the Federal Rules. It is thus necessary to consider whether Uwatec's failure to comply was indeed "due to inability, and not to willfulness, bad faith, or any fault of petitioner." Id.

In Societe Internationale the Supreme Court established several much-discussed general principles. 2 First, to avoid sanctions The second principle is that a fair balance should be struck when the non-producing party could reasonably incur foreign criminal liability by complying with the discovery order. The Court made clear that failure of production because of potential criminal liability was a weighty excuse. The Court recognized that absence of records might impact upon the burdens and defenses at trial, and left it to the trial court to devise fair procedures and remedies, on the facts and evidence, when compliance is burdened with foreign criminal liability.

                the party that is unable to comply with a valid discovery request must have acted in good faith.  The Court stated that any evidence of collusion with a foreign government in "court[ing] legal impediments ... would have vital bearing on justification for dismissal of the action."  357 U.S. at 209, 78 S.Ct. at 1094.   The non-producing party must have made a good faith effort to obtain sovereign consent to produce the requested records
                

The third principle is that when compliance with a discovery request is illegal in the foreign country, before non-production is punished in the United States, due consideration must be given to alternative sources of the information or other modes of establishing the necessary facts. In sum, Societe Internationale requires that when there are foreign legal barriers to the production of documents, the courts in the United States must balance the interests and needs of the parties in light of the nature of the foreign law and the party's efforts to comply in good faith with the demanded production.

These principles are elaborated in the Restatement (Second), Foreign Relations Law of the United States (1965). Section 40 of the Restatement provides that when two nations have jurisdiction to prescribe and enforce national rules of law that are inconsistent, each nation is required by international law to consider, in good faith, moderating the exercise of its enforcement jurisdiction in light of the law of the other nation. Factors to be considered include whether the particular issue represents a vital national interest; the nature of the parties' interests and the nature of the discovery that is sought; the territory in which the demanded conduct would occur; the nationality of the person ordered to act, in relation to the sovereign that is prohibiting the demanded conduct; and the extent to which a nation is in a position to enforce compliance or penalize non-compliance with its law. The need for the...

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