Tellabs Operations, Inc. v. Fujitsu Ltd.
| Decision Date | 01 May 2012 |
| Docket Number | No. 09 C 4530,No. 08 C 3379,08 C 3379,09 C 4530 |
| Parties | TELLABS OPERATIONS, INC. Plaintiff, v. FUJITSU LIMITED AND FUJITSU NETWORK COMMUNICATIONS, INC., Defendants. FUJITSU LIMITED, Plaintiff, v. TELLABS OPERATIONS, INC, ET AL., Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
MEMORANDUM OPINION AND ORDER
In January 2008, Fujitsu Limited ("Fujitsu") filed suit against Tellabs Operations, Inc. ("Tellabs") in the Eastern District of Texas, charging it with infringing three of Fujitsu's patents for optical amplifiers.1 A few months later, in June, Tellabs filed a patent infringement suit in the Northern District of Illinois against Fujitsu, alleging that it infringed Tellabs' Patent No. 7,369,772. Fujitsu filed a counterclaim in that case, claiming that Tellabs had infringed yet another of Fujitsu's patents, No. 7,227,681. Fujitsu's Texas suit was transferred here and consolidated with the Illinois suit for the purposes of discovery.
Before turning to the question raised by the motion for protective order, it is appropriate to express the court's appreciation to counsel for both sides for the extraordinary degree of professionalism with which they have comported themselves. Discovery may well be the bane of modern litigation, Rossetto v. Pabst Brewing Co., Inc., 217 F.3d 539, 542 (7th Cir. 2000)(Posner, J.), but this case shows that it need not be fractious, and that lawyers can fulfill their obligation to participate fully and fairly in discovery without sacrificing in the slightest their obligations to their clients. That there have been so few discovery disputes requiring the court's involvement is a testament to the way in which counsel have dealt with each other.2
The question for resolution is whether Fujitsu is entitled to a protective order prohibiting Tellabs from taking discovery regarding Fujitsu's inspection in 2006 of Tellabs' optical scanner. Fujitsu argues that the inspection was conducted by its own employees, who were specially assigned to that task in anticipation of litigation and, since they will not be testifying at trial, their endeavors are protected by the work product doctrine and Rule 26(b)(4)(D), Federal Rules of Civil Procedure.3 Codified at Rule 26(b)(3) of the Federal Rules of Civil Procedure, the work-product doctrine is designed to protect an attorney's thought processes and mental impressions against disclosure and to limit the circumstances in which attorneys may piggyback on the fact-finding investigation of their adversaries. See Hickman v. Taylor, 329 U.S. 495 (1947); Sandra T.E. v. South Berwyn School Dist. 100, 600 F.3d 612, 621-622 (7th Cir.2010). Rule 26(b)(4)(D) prohibits discovery by one party of "facts known or opinions held by an expert who has been retained or specially employed byanother party in anticipation of litigation or to prepare for trial and who is not expected to be called as a witness at trial."
Resolution of the current controversy is complicated by the parties' competing assessments of the underlying facts, their disagreement over application of the relevant legal principles, and the lack of unanimity among the lower courts about the meaning of Rule 26(b)(4)(D).4 Wright and Miller, in their treatise on Federal Practice and Procedure, have said that the number of situations in which the protective provisions of the Rule would come into effect is small. In their view, "[t]here is a legitimate concern that a party may try to immunize its employees who are actors or viewers against proper discovery by designating them experts retained for work on the case," and they warn that "courts should be exceedingly skeptical when employees who have otherwise discoverable information are designated 'experts,' and efforts must be made to preserve the opportunity to discovery that information." 8A Wright, Miller, & Marcus, Federal Practice & Procedure, §2033 at 126 (2010). That caution finds proper application in this case.
In 2005, Tellabs pulled off what industry commentors called a "surprise upset" over Fujitsu and others in the optical networking world by cutting a deal with Verizon Communications, Inc., for the sale of more than a quarter billion dollars of optical transport equipment. (Tellabs' Response, Ex. C). When Fujitsu's stunned representatives spoke with Verizon to find out what happened, they were told, among other things, that Tellabs ' 7100 optical amplifier was more advanced thanFujitsu's, and that Fujitsu had to innovate to catch up. Fujitsu's amplifier technology was described as "old," and its product "weak." (Tellabs' Response, Exs. E, F). Fujitsu was in a state of what may fairly be called corporate panic.
In a September 2005 document captioned "Post Mortem & Question/Request," Fujitsu expressed an urgent need to catch up to Tellabs, about which the document lamented Fujitsu knew "nothing at all." The document stressed that for the (Tellabs' Response, Ex. I)(caps emphasis in original). 5
In October 2005, Fujitsu sent to six of its engineers an anguished e-mail in anticipation of an "after business hours" discussion. The e-mail repeated what was in the September Post Mortem, saying that Fujitsu , which the e-mail said The email again implored FNC to try to buy Tellabs' equipment. "PLEASE!" In this way, Fujitsu hoped to "leap frog" Tellabs' technology. (Tellabs' Response, Ex. G)(caps emphasis in original).
Fujitsu's own documents make undeniable the fact that Fujitsu was consumed by the perceived need to acquire the competing product so that it could "learn... directly from the product itself." (Tellabs' Response, Ex. I). One of the six individuals to whom the email was sent was Hiroyuki Itou, one of the three engineers who eventually would inspect the equipment, and who Fujitsu claims was not routinely involved in the examination of competitors' equipment for business purposes. (Tellabs' Response, Ex. G).6 A Tellabs 7100 Optical Scanner was obtained through eBay in August 2006 by Ted Van Ryn, who headed the competitive intelligence group at FNC. (Tellabs' Response, Ex. J). The total weight of the equipment purchased was 1,400 lbs. in two crates and 18 pallets. Van Ryn took the steps necessary to ensure that the identity of the purchaser was unknown to the seller. (Ex. I, J). Three modules, each of which was an optical amplifier was inspected by Fujitsu. Engineers in Japan.
In support of the motion for a protective order, Fujitsu attached an affidavit from FNC's general counsel, Melanie Wright, who swore that the allegations in her affidavit were true and that they were based upon her personal knowledge. Ms. Wright's affidavit made no mention of the email just a few months earlier in which Fujitsu was desperately seeking to purchase a Tellabs optical scanner so that inspections could be conducted for what were obviously business and competitive reasons. She asserted that:
Beginning in the Spring of 2006, I worked with staff members from the Legal and Patent Departments of FNC and Fujitsu and other FNC and Fujitsu employees to investigate the possibility that products sold by the Tellabs defendants (collectively "Tellabs") infringed one or more patents owned by Fujitsu. I oversaw and at times helped to coordinate the activities of these employees in conducting the Tellabs investigation. As part of investigation into Tellabs products, FNC employees, in
October 2006, purchased some salvaged Tellabs equipment and supporting documentation advertised on e-Bay's™ website by an equipment dealer named GaTechSales. The Tellabs equipment, which consisted of various modules from the Tellabs 7100 Optical Transport System, and the supporting documentation were available to any member of the general public willing to pay the "Buy It Now" purchase price listed on the site. (See, Exhibit A hereto.) No confidentiality restrictions of any kind were placed by GaTechSales or eBay™ on the equipment or its sale. (See, Exhibit A.).
(Fujitsu's Motion, Wright Decl., ¶ 2)(emphasis supplied).
Thus, while the in-house documents leading up to the purchase evince a concern that Fujitsu had fallen behind Tellabs' technology and that urgent business interests necessitated the purchase and inspection of a Tellabs optical scanner, Ms. Wright states that the purchase and inspection of the Tellabs equipment were driven by the possibility that Tellabs might have infringed Fujitsu's patents. The affidavit is silent on the basis of this conjecture and says nothing about the investigation so desperately sought by Fujitsu after losing the Verizon contract.7
Ms. Wright goes on to state that, when the Tellabs products arrived from e-Bay, a number of the modules were damaged; which ones she conveniently does not say. "FNC scrapped most of these," she claimed, and "a small number were shipped to Fujitsu, along with a single set of technical manuals that accompanied the modules. . . ." (Fujitsu's Motion, Wright Decl., ¶ 2). Ms....
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