Audio Mpeg, Inc. v. HP Inc.
| Decision Date | 10 March 2017 |
| Docket Number | Case No.16-mc-80271-HRL |
| Parties | AUDIO MPEG, INC, Plaintiff, v. HP INC., et al., Defendants. |
| Court | U.S. District Court — Northern District of California |
Respondent Dell, Inc. ("Dell") is the defendant and counter-claimant in litigation before the Eastern District of Virginia. Dell served two subpoenas on non-parties that are the subject of the current motions before this court; one requesting documents and testimony from Apple, Inc. ("Apple"), and one requesting documents and testimony from Patrick Murphy ("Murphy"), a current Apple employee. Both Apple and Murphy moved to quash the subpoenas. Dkt. Nos. 1, 5. For the reasons described below, the court grants both motions to quash.
In the underlying litigation, Dell is being sued by plaintiffs Audio MPEG, Inc., U.S. Philips Corporation, TDF SAS, and Institut for Rundfunktechnick GmbH ("Plaintiffs"), for patent infringement. Dkt. No. 15-7, Ho Decl., Ex. B. Dell has also counter-claimed against Plaintiffs and Societa Italiana Per Lo Sviluppo Dell'Elettronica SPA (together, "Counter-Defendants"). Dell alleges claims for (1) Violation of the Sherman Act § 1: Agreement in Restraint of Trade; (2) Violation of the Sherman Act § 1: Tying; (3) Violation of the Sherman Act § 2: Conspiracy to Monopolize; (4) Violation of the Sherman Act § 2: Monopolization; (5) Civil Conspiracy Under Virginia Va. Code. Ann. §§ 18.2-499-500; and (6) Common Law Civil Conspiracy Under Virginia State Law. Dkt. No. 15-7, Ho Decl., Ex. A. Non-party Apple is a licensee of Counter-Defendants and an alleged un-named co-conspirator. Dkt. No. 15-3. The court is intentionally vague as to the details of the alleged conspiracy and antitrust violations, as these matters were subject to a sealing order in the Eastern District of Virginia.
In August of 2016, Dell served Apple with a subpoena demanding production of documents in 22 categories and testimony on 19 topics. Dkt. No. 1, Cannom Decl., ¶ 2, Ex. A. The parties met-and-conferred in August and Apple served its objections, id., at ¶¶ 3-7, and there the matter remained until December as the result of a stay on discovery. In December, Apple and Dell resumed meet-and-confer efforts. Id. at ¶¶ 14-16. Dell agreed to narrow the scope of its requests and identified five Apple employees it believed possessed relevant documents. Id. Apple, in turn, began its document review, but asserts that it identified no documents that were relevant and non-privileged. Id. at ¶ 18.
Dell's narrowed requests for documents included three categories: (1) communications regarding Apple's licensing agreements with Counter-Defendants; (2) communications regarding Apple's relationship with Counter-Defendants as a licensee or potential licensee; and (3) "certain sales data for Apple products that are relevant to damages in the E.D. Va. Litigation." Dkt. No. 15-5, Ho Decl., ¶ 2. Dell also narrowed its requests for deposition testimony to the following topics (the numbers correspond to the topic numbers in the subpoena): (2) "Apple's licenses, proposed licenses, settlement agreements, proposed settlement agreements, and negotiations regarding the Patents-in-Suit or the SISVEL Patent Pool[;]" (5) an agreement between Apple and Counter-Defendants, "including but not limited to communications and negotiations regarding" that agreement between Apple and Counter-Defendants; (6) a 2015 amendment to the agreement in topic 5, "including but not limited to [related] communications and negotiations[;]" and (9) "Any agreements or understandings or discussions between Counter-Defendants and Apple, regarding the licensing of Dell for the Patents-in-Suit or the SISVEL Patent Pool, or the filing, status, or pursuit of litigation against Dell regarding infringement of the Patents-in-Suit or the SISVEL Patent Pool, including this lawsuit." Dkt. No. 15-5, Ho Decl., ¶ 3; Dkt. No. 2-1,Cannom Decl., Ex A.
As Apple continued to object to Dell's requests, and the parties were unable to reach agreement, Apple filed its motion to quash in late December 2016. In its motion, Apple argues: (1) Dell identifies no relevant, non-privileged information that is not available from parties to the underlying litigation; (2) Dell's requests are overly burdensome and overbroad; (3) the burden to Apple of complying with the subpoena outweighs the benefits to Dell; and (4) the costs of Apple's compliance should be shifted to Dell, or the court should sanction Dell. Dkt. No. 1. In response, Dell argues that (1) it has narrowed its requests, so that Apple's overbreadth arguments are "red herrings;" (2) the information it requests is relevant, not available from other parties, and proportional to the needs of the litigation; (3) Apple's privilege arguments are meritless; and (4) Apple should bear its own costs. Dkt. No. 15.
The sequence of events described above roughly parallels that relevant to the subpoena Dell served upon Patrick Murphy. Murphy is an attorney currently employed by Apple. Dkt. No. 7, Murphy Decl., ¶¶ 1, 2. Murphy also represented Cyberlink Corp. (a company to which Counter-Defendants declined to license the Patents at issue in the underlying litigation) on patent licensing matters as outside counsel in a previous position. Id. at ¶ 3. The initial subpoena served by Dell contained requests for (1) "Documents reflecting communications between Counter-Defendants and Cyberlink USA or Cyberlink Corp.," (2) "Documents reflecting communications between Counter-Defendants and Microsoft," and (3) "Documents reflecting any negotiations or agreements to license the Asserted Patents," as well as deposition testimony. Dkt. No. 6-1, Cannom Decl., Ex. A. Dell, however, neglected to tender witness fees with the subpoena. Additionally, Murphy asserted that he had "no documents" in his possession that related to the subpoena. Dkt. No. 7, Murphy Decl., ¶ 7. In light of this, and following additional discussions with Murphy's counsel (who also represents Apple in this matter), Dell served Murphy with a second subpoena, accompanied by witness fees and lacking requests for production of documents. Dkt. No. 15-12, Ho. Decl., Exs. F, G.
As with Apple, Murphy filed a motion to quash in late December 2016. In his motion, heargues that (1) the initial subpoena should be quashed due to Dell's failure to tender witness fees;1 (2) the information sought is overbroad and unduly burdensome; (3) the information sought is available from a party or is privileged; and (4) the burden on Murphy of compliance outweighs the benefits to Dell. Dkt. No. 5. In response, Dell argues that (1) Murphy's burden objections are meritless because Murphy fails to demonstrate any special burden; (2) the information Dell seeks is not available from other parties and is proportional to the needs of the underlying litigation; and (3) Murphy's privilege argument is meritless.
Federal Rule of Civil Procedure 45 provides in pertinent part that "the court for the district where compliance is required must quash or modify a subpoena that . . . (iii) requires disclosure of privileged or other protected matter, if no exception or waiver applies; or (iv) subjects a person to undue burden." Fed. R. Civ. P. 45(d)(3)(A). The scope of discovery permitted through a Rule 45 subpoena is "the same as" that permitted under Rule 26(b). Intermarine LLC v. Spliethoff Bevrachtingskantoor BV, 123 F. Supp. 3d 1215, 1218 (N.D. Cal. 2015). Thus, the court must limit discovery if the discovery sought can be obtained from a more convenient or less burdensome source, or if "the burden or expense of the proposed discovery outweighs its likely benefit." Fed. R. Civ. P. 26(b).
On a Rule 45 motion to quash, "the moving party has the burden of persuasion, but the party issuing the subpoena must demonstrate that the discovery sought is relevant." Lemberg Law LLC v. Hussin, No. 16-mc-80066-JCS, 2016 WL 3231300, at *5 (N.D. Cal. June 13, 2016) (quoting Pers. Audio LLC v. Togi Entm't Inc., No. 14-MC-80025 RS (NC), 2014 WL 1318921, at *2 (N.D. Cal. Mar. 31, 2014)). Rule 45 "explicitly instructs that a court must quash a subpoena that seeks disclosure of privileged material[.]" Id., at *2. Courts disfavor blanket assertions of privilege, U.S. v. Martin, 278 F.3d 988, 1000 (9th Cir. 2002), but courts have quashed subpoenas where the issuing party has failed to explain "what non-privileged, relevant information [the subpoenaed witness] could offer," Unigene Labs., Inc. v. Apotex, Inc., No. C07-80218 SI, 2007WL 2972931, at *3-4 (N.D. Cal. Oct. 10, 2007).
Categories one and two and all four deposition topics each request communications regarding Apple's licenses, agreements, and/or licensing relationship with the Counter-Defendants. Inasmuch as these requests seek external communications, agreements, or negotiations between Apple and the Counter-Defendants, Dell has not established that documents pertaining to these requests could not be more easily obtained from parties to the litigation. "There is simply no reason to burden nonparties when the documents sought are in possession of the party defendant." Nidec Corp. v. Victor Co. of Japan, 249 F.R.D. 575, 577 (N.D. Cal. 2007).
Dell maintains that it is entitled to ask Apple about its understanding of these communications (and, presumably, for internal communications that reflect that understanding). To demonstrate that it is entitled to this information, however, Dell must first show that Apple's understanding of these communications is relevant to its claims in the underlying litigation. Lemberg Law LLC v. Hussin, No. 16-mc-80066-JCS, 2016 WL 3231300, at *5 (N.D. Cal. June 13, 2016) (quoting Pers. Audio LLC v. Togi Entm't Ine, No. 14-MC-80025 RS (NC), 2014 WL 1318921, at *2 (N.D. Cal. Mar. 31, 2014)) ("the party issuing the subpoena must demonstrate that...
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