On October 22 we reported that a patent troll by the name of GPNE Lost their patent infringement case against Apple. Now Patently Apple is first to discover that there may be a little more to this case. Late on Friday Apple applied to the US District Court in Hawaii an ex parte for an order granting Apple leave to obtain targeted discovery from GPNE Corp. for use in a foreign proceeding.
We begin this report with the final conclusion that everyone could understand. It gets to the point concisely. We did this because after the conclusion, general readers may find the reading a little difficult to follow as Apple quotes details of ex parte discovery procedures understandable only to attorneys and patent agents.
The limited discovery sought by Apple is important to the China litigation, and will allow Apple to present the probative evidence regarding the value of GPNE's patents and its history of granting licenses. Because of the importance of the evidence in question, and because Apple's request satisfies the statutory requirements of 28 U.S.C. § 1782, Apple respectfully requests that this Court grant this Application. If this Application is granted, Apple will serve a subpoena in substantially the same form as Exhibit 3 to its application. To the extent that GPNE has any confidentiality concerns, Apple is willing to discuss entering into an agreed upon protective order, under which the documents produced would be offered the maximum protection available under Chinese Law
1. Introduction and Factual Background
Apple is currently involved in litigation in both China and the United States with GPNE, a non-practicing patent holding and licensing company based in Honolulu, Hawaii. On January 28, 2013, GPNE filed suit against Apple Inc. and Apple Computer Trading (Shanghai) Co. Ltd. in the Shenzhen Municipal Intermediate People's Court in Shenzhen, China.
GPNE alleges that these two Apple entities have infringed several claims from Chinese Patent No. ZL 95190550 (the '550 China Patent). In parallel with the China litigation, on July 1, 2011, GPNE initiated a patent lawsuit against Apple in the District of Hawaii which was later transferred to the Northern District of California alleging infringement of U.S. Patent Nos. 7,555,267, 7,570,954, and 7,792,492.
The '550 China Patent and the U.S. patents that GPNE is asserting in the Northern District of California case all claim priority to the same parent application and share the same specification. In the China litigation, GPNE accuses of infringement every Apple product that supports the General Packet Radio Service ("GPRS") standard.
The Shenzhen Court conducted its first evidentiary exchange on December 13, 2013 and its first evidentiary hearing on December 16, 2013, and will soon schedule the second evidentiary exchange and hearing. During the first hearing, the parties produced evidence primarily related to liability, and provided some argument on the merits of GPNE's claims.
At the hearing, GPNE also introduced evidence intended to support an "illegal gains" damages model. Under Chinese law, a claim for "illegal gains" may be chosen by the patentee if a claim for "lost profits" is difficult to determine. Although Chinese courts typically start the damages analysis with plaintiff's chosen damages model, Chinese law allows for different damages models, and GPNE may be constrained in the damages it can seek by its licensing practices.
However, under Chinese law, there is no discovery process in civil litigation proceedings similar to that in the United States. Accordingly, GPNE may not be subject to any legal liability if it refuses to submit the relevant license agreements to the Shenzhen Court. Id. To the extent Apple intends to argue to the Shenzhen Court that GPNE's licensing practices should inform any damages model, it will be necessary for Apple to produce GPNE's licenses to the court. After the parties have provided the necessary evidence, Apple expects that the Shenzhen Court will weigh the evidentiary submissions and arguments and, should the court find Apple liable, may make a damages determination.
Under 28 U.S.C. § 1782, interested parties, such as Apple, may obtain discovery for use in foreign proceedings from companies located within the United States. In support of its defenses to the patent infringement lawsuit filed by GPNE against Apple in China, Apple seeks narrowly-tailored discovery from GPNE. Specifically, Apple seeks from GPNE any and all patent license agreements between GPNE and any third-party related to the patents that GPNE has asserted against Apple, as well as GPNE's licensing communications with any third-parties.
A. Legal Standard
Section 1782 is "the product of congressional efforts, over the span of nearly 150 years, to provide federal-court assistance in gathering evidence for use in foreign tribunals." Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 247 (2004). Over time, Congress has "substantially broadened the scope of assistance federal courts could provide for foreign proceedings." Id. at 247-49. Section 1782 provides in part:
The district court of the district in which a person resides or is found may order him to give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or international tribunal . . . . The order may be made . . . upon the application of any interested person and may direct that the testimony or statement may be given, or the document or other thing be produced, before a person appointed by the court.
28 U.S.C. § 1782(a). The statute thus sets forth three requirements, authorizing the district court:
To grant a Section 1782 application where "(1) the person from whom discovery is sought resides or is found in the district of the district court to which the application is made, (2) the discovery is for use in a proceeding before a foreign tribunal, and (3) the application is made by a foreign or international tribunal or 'any interested person'."
In re Ecuador, No. C-10-80225 MISC CRB (EMC), 2010 U.S. Dist. LEXIS 102158, at *4 (N.D. Cal. Sept. 15, 2010) (quoting In re Chevron, 709 F. Supp. 2d 283, 290 (S.D.N.Y. 2010)).
In Intel, the Supreme Court set forth several nonexclusive factors to aid district courts in determining how to exercise their discretion in granting Section 1782 applications. These factors include (1) whether "the person from whom discovery is sought is a participant in the foreign proceeding"; (2) "the nature of the foreign tribunal, the character of the proceedings underway abroad, and the receptivity of the foreign government or the court or agency abroad to U.S. federal-court judicial assistance"; (3) whether the request is "an attempt to circumvent foreign proof-gathering restrictions or other policies of a foreign country or the United States"; and (4) whether the discovery is "unduly intrusive or burdensome." Intel, 542 U.S. at 264-65.
B. Apple's Application Meets the Section 1782 Requirements
Apple's request for Section 1782 discovery meets each of the statutory requirements. First, the party from which discovery is sought, GPNE, "resides or is found" in this District. GPNE has its corporate headquarters at 2800 Woodlawn Drive, Suite 101, Honolulu, Hawaii 96822, which is located in this District. (excerpt of GPNE webpage: http://gpnecorp.com/contactus.html). In addition, as this Court previously found, GPNE's principal place of business and all employees are located in Hawaii.
Second, Apple seeks this discovery for use in a "proceeding before a foreign tribunal." Specifically, Apple seeks information related to litigation currently pending in China between Apple and GPNE. A foreign patent litigation qualifies as a "tribunal" for purposes of Section 1782. In re Samsung Elecs. Co., 2013 U.S. Dist. LEXIS 10518, at *5 (N.D. Cal. Jan. 23, 2013) (finding that patent litigation in Japan satisfies the "proceeding before a foreign tribunal" requirement).
Third, Apple is a party to the China litigation and therefore qualifies as an "interested party."
Accordingly, Apple has satisfied the three statutory requirements for an application under 28 U.S.C. § 1782.
C. The Supreme Court's Intel Factors Strongly Favor Granting Apple's Application
In addition, the factors identified by the Supreme Court in Intel and later cases weigh heavily in favor of the Court exercising its discretion to grant Apple's request for discovery.
The Requested Discovery Is Not Obtainable in China Even Though GPNE Is a Party to the Foreign Proceedings
The first factor under Intel is whether "the person from whom discovery is sought is a participant in the foreign proceeding." Intel, 542 U.S. at 264 (noting that "nonparticipants in the foreign proceeding may be outside of the foreign tribunal's jurisdictional reach; hence, their evidence, available in the United States, may by unobtainable absent Sec 1782 aid"). The concern underlying the first factor is the risk that evidence from nonparticipants might be unobtainable in the foreign jurisdiction absent Section 1782 discovery.
Here, the requested documents are unobtainable by Apple in China. Under Chinese law, there is no discovery process in civil litigation proceedings similar to that in the United States. See Ex. 5, Jun Decl. at ¶ 11. Accordingly, Chinese law does not provide for document requests, interrogatories, or depositions by which Apple could seek the requested documents. Because the requested documents cannot be obtained under Chinese law, the first Intel factor weighs in favor of granting Apple's application. See, e.g., In re Application of Carsten Rehder Schiffsmakler Und Reederei GmbH & Co., 2008 U.S. Dist. LEXIS 88434, at *4-5 (M.D. Fla. Oct. 17, 2008) (granting application for § 1782 discovery where discovery was sought from a party to Chinese lawsuit because "China's rules of procedure relating to discovery are not comparable to our own and that obtaining the information without this Court's assistance is by no means assured"); In re Servicio Pan American de Proteccion, C.A., 354 F. Supp. 2d 269, 274 (S.D.N.Y. 2004) (ordering § 1782 discovery from a party to the foreign proceeding where production of the necessary documents was likely not obtainable under the law of the foreign jurisdiction); In re Procter & Gamble Co., 334 F.Supp.2d 1112 (E.D.Wis. 2004) (allowing discovery against a party in the foreign proceedings, where it was not clear if the non- U.S. tribunal could order the required discovery).
2. Apple Seeks Highly Relevant Information that Will Assist the Foreign Court
Second, the Intel court held that district courts could "take into account the nature of the foreign tribunal, the character of the proceedings underway abroad, and the receptivity of the foreign government or the court or agency abroad to U.S. federal court judicial assistance." Intel, 542 U.S. at 264. See also In re Ont. Principals' Council, 2014 U.S. Dist. LEXIS 109752, at *6 (D. Ariz. Aug. 1, 2014) (finding the second Intel satisfied where "the information sought has the potential to be relevant to the information sought has the potential to be relevant to the contemplated proceedings"); In re Bayer AG, 146 F.3d 188, 195-96 (3d Cir. 1998) (documents relevant to the foreign proceedings are "presumptively discoverable" under Section 1782).
The "nature and character" of the China litigation is that GPNE has accused Apple of patent infringement and is seeking both monetary damages and potentially an injunction. The requested patent licenses are relevant evidence of the value of GPNE's asserted patents because they constitute real-world prices paid by third parties to license GPNE's patent portfolio. The requested documents show GPNE's pattern and practice of licensing its patents, and may be used as evidence in support of Apple's arguments against an injunction. The requested documents are therefore probative to the claims and defenses at issue in the China litigation. It is the expectation of Apple's counsel in the China litigation that if Apple obtains the documents requested pursuant to the Section 1782 application, and provides them to Shenzhen Municipal Intermediate People's Court, that court will give them due consideration as part of its analysis of any damages issues. See Ex. 5, Jun Decl. at ¶ 13.
No Foreign Discovery Restrictions Bar Apple's Requested Discovery
Third, the Intel Court held that a district court could consider whether the applicant was attempting "to circumvent foreign proof-gathering restrictions or other policies of a foreign country or the United States." Intel, 542 U.S. at 260-63, 265 (noting that Section 1782 does not require that the information sought be discoverable in the foreign action).4 Here, Apple is unaware of any restrictions on proof-gathering procedures existing in China that would prohibit obtaining the discovery it seeks through Section 1782.
Apple's Discovery Is Narrowly Tailored to Avoid Undue Burden.
Lastly, the Intel Court held that "unduly intrusive or burdensome requests may be rejected or trimmed." Intel, 542 U.S. at 265. Apple's two proposed discovery requests are narrowly tailored and minimally burdensome. The body of potentially responsive documents is limited, consisting of license agreements and related licensing communications. Many of these license agreements are publically advertised on GPNE's website. (Hawkinson Decl. at Ex. 8). As a result of the U.S. patent litigation between Apple and GPNE, these documents are already in the possession of GPNE's outside counsel and could be readily produced.
Accordingly, all four Intel factors weigh in favor of this Court granting Apple's application. Courts in this Circuit routinely permit discovery under Section 1782, when, as here, the applicant has satisfied the statutory requirements and the Intel factors weigh in favor of granting relief. E.g., In re Am. Petroleum Institute, 11- 80008-JF (PSG), slip op. (N.D. Cal. Apr. 7, 2011) (Hawkinson Decl. Ex. 6); In re Ecuador, 2010 WL 3702427, at *2; London v. Does 1-4, 279 Fed. Appx. 513 (9th Cir. 2008); Chevron Corp. v. E-Tech Int'l, CV No. 10-cv-1146-IEG, 2010 WL 3584520 (S.D. Cal. Sept. 10, 2010); Govan Brown & Assocs. v. Doe, No. 10-2704-PVT, 2010 U.S. Dist. LEXIS 88673, at *7-8 (N.D. Cal. Aug. 6, 2010); Mirana v. Battery Tai-Shing Corp., No. 08-80142, slip op. (N.D. Cal. Sept. 19, 2008) (Hawkinson Decl. Ex. 7).
III. Conclusion (Repeated)
The limited discovery sought by Apple is important to the China litigation, and will allow Apple to present the probative evidence regarding the value of GPNE's patents and its history of granting licenses. Because of the importance of the evidence in question, and because Apple's request satisfies the statutory requirements of 28 U.S.C. § 1782, Apple respectfully requests that this Court grant this Application. If this Application is granted, Apple will serve a subpoena in substantially the same form as Exhibit 3. To the extent that GPNE has any confidentiality concerns, Apple is willing to discuss entering into an agreed upon protective order, under which the documents produced would be offered the maximum protection available under Chinese Law
Apple filed their ex parte application for an order granting leave to obtain discovery for use in a foreign proceeding in Hawaii under civil docket for case #: 1:14-mc-00232-LEK-KSC. The Presiding Judge in this case is noted as being Judge Leslie E. Kobayashi.
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