American Patents LLC v. Mediatek, Inc. et al

Western District of Texas, txwd-6:2018-cv-00339

RESPONSE Defendants' Opposition to American Patents' Requested Additional Revisions to Defendants' Protective Order to 160 Response by Broadcom Corporation, Broadcom PTE. Ltd., Lenovo (Shanghai) Electronics Technology Co. Ltd., Lenovo Group Ltd., MediaTek USA Inc., MediaTek, Inc., NXP B.V., NXP Semiconductors N.V., NXP USA, Inc., Qualcomm Incorporated, Qualcomm Technologies, Inc.

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3 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS WACO DIVISION AMERICAN PATENTS LLC, Plaintiff, v. CIVIL ACTION NO. 6:18-CV-339 MEDIATEK INC., ET AL., JURY TRIAL DEMANDED Defendants. DEFENDANTS' OPPOSITION TO AMERICAN PATENTS' REQUESTED ADDITIONAL REVISIONS TO DEFENDANTS' PROTECTIVE ORDER 3 I. INTRODUCTION Plaintiff seeks to unravel Protective Order restrictions to which it previously agreed or the Court adopted over its objections. The parties already engaged in multiple rounds of briefing and participated in a fulsome hearing aimed at resolving all contested issues regarding the entry of a Protective Order. Coming out of the hearing, the Court reserved one issue – cross-production of Defendants' Protected Material – but otherwise resolved the parties' disputes. Nonetheless, Plaintiff now attempts to undo the Court's ruling rejecting its arguments for a carve-out of the definition of Source Code that would effectively swallow the definition, and argues for freedom to store and review Defendants' highly-sensitive information outside the United States because it may engage a low-cost vendor in India. As to the former, there is no reason to re-visit the Court's ruling, and Plaintiff's proposed carve-out is unclear, unworkable, inadequate to protect Defendants' most sacred information, and an invitation for further disputes. As to the latter, Plaintiff's eleventh-hour argument should be rejected as untimely and because Defendants should not have to bear the risks inherent in storing their highly-sensitive information outside the United States simply because Plaintiff wants to litigate this case it initiated in the United States on the cheap. Finally, Plaintiff should not be permitted to cross-produce one Defendant's confidential information to another Defendant. Each Defendant is separately accused of infringement, and one Defendant's confidential information has no bearing on Plaintiff's case against another Defendant. Plaintiff's desire to avoid the burden associated with having to serve separate expert reports does not trump Defendants' confidentiality interests. Accordingly, Defendants' respectfully request that the Court reject Plaintiff's proposed modifications and adopt Defendants' post-Status Conference Protective Order (Dkt. No. 159-1). 3 II. ARGUMENT A. Plaintiff's attempt to re-write Section 8.a would unravel the necessary protections for Defendants' Source Code and Chip-Level Schematics and should be rejected. Plaintiff seeks to modify the HIGHLY CONFIDENTIAL – SOURCE CODE designation under Section 8.a of the Protective Order so that a Producing Party may not utilize that designation for material that "is or has been: '1) emailed or otherwise made accessible via a public network or stored on cloud-based servers or on shared drives, or 2) provided to third party developers or similar third parties.'" Dkt No. 160 at 6 (quoting Dkt. No. 159-3, at 8.a). At the threshold, Plaintiff's second bite at the apple should be rejected. During the Status Conference, the Court heard lengthy argument about the "HIGHLY CONFIDENTIAL – SOURCE CODE" designation and what material qualified for that designation. Plaintiff argued for the same kind of carve-out that it proposes now, and the Court weighed the competing concerns of protecting Defendants' Source Code and Chip-Level Schematics against affording Plaintiff the ability to prosecute its case. Ultimately, the Court rejected Plaintiff's proposal and instead opted to keep Defendants' language. See Sept. 20, 2019 Hr'g Tr. (Dkt. No. 156) at 7-19, 39-41. That was the correct result because it appropriately balanced protecting Defendants' valuable confidential information with Plaintiff's need to access such information. Nothing has changed that would warrant re-visiting that ruling. Regardless, Plaintiff's renewed proposal regarding Section 8.a is nonsensical, as it is based on faulty premises. Plaintiff presumes (1) that it should be treated the same as "a third party developer or similar third parties" and (2) that Source Code somehow loses its status as Source Code depending on how it is stored or transmitted. However, just because Source Code may be stored on a cloud-based server or shared drive does not mean there are no confidentiality or security protocols in place to protect the confidentiality of the Source Code. Similarly, a Producing Party -2- 3 may make Source Code available to customers for download via a secure portal and under confidentiality restrictions to maintain the Source Code securely. Contrary to Plaintiff's argument, it does not stand in the same position as a customer with whom a Producing Party has a contractual relationship that governs the confidential and secure exchange and maintenance of the Source Code. Not surprisingly, the Court already expressly rejected Plaintiff's argument that Plaintiff should be treated the same as a customer. Id. at 12:21-13:17 (MR. HARRINGTON: "You know, we – the issue I see is they're somehow going to treat us differently than they would treat a customer and –" THE COURT: "Well, that's actually -- that's fair. What I'm trying to do is I just -- I want to make sure that what I'm -- what I'm trying to balance here is I want to make sure you all have access and -- but the access is to the source code …. But, I mean, y'all -- your expert is different than a customer. I mean, that is -- it's not exactly the same thing. I'm just trying to -- what I'm -- and so on source code I think you're going to have to deal with -- I want you to have the least inconvenient way to review the source code you can, but I'm going to protect their source code.") Plaintiff's proposed revisions to Section 8.a should also be rejected because they are vague, ambiguous and unworkable. For example, it is not clear what is meant by "emailed or otherwise made accessible via a public network or stored on … shared drives" or by "provided to third party developers or similar third parties." For instance, identifying whether a single source code file or portion thereof was internally emailed or externally provided to a developer (even on a secure system) and segregating that file from the remainder of the code base is impractical, unworkable and makes no sense. Producing Parties under the Protective Order cannot operate under such unclear and amorphous language when the protection of some of their most sacred information is at stake. Not surprisingly, Plaintiff cited no cases endorsing or adopting the language that it has proposed. -3- 3 Finally, if Plaintiff believes a Defendant's designation is unwarranted, it is not without recourse. Indeed, there already is a mechanism in place for Plaintiff to challenge the designation under the Protective Order. See Protective Order (Dkt. 159-1), Section 15. That is the appropriate way to address any issues surrounding designation disputes, not a vague, ambiguous and unworkable carve-out provision that, broadly construed, could swallow the protections afforded Source Code and Chip-Level Schematics and/or invite further disputes about the meaning and intent of the language Plaintiff proposes. B. Plaintiff's new argument that it should be permitted to store and review Defendants' Attorneys' Eyes Only and Source Code materials outside the United States should be rejected. Despite several rounds of briefing and a lengthy hearing in which the Court gave Plaintiff multiple opportunities to raise any issues it had with Defendants' proposed protective order, not once did Plaintiff contest, object, or otherwise raise any argument concerning the requirement that Defendants' HIGHLY CONFIDENTIAL – ATTORNEYS' EYES ONLY and HIGHLY CONFIDENTIAL – SOURCE CODE materials (collectively, "Highly Confidential Material") be stored in the United States. See generally Dkt. Nos. 138, 145, 149, 156. Yet, now, for the first time in its Response to Defendants' Submission of Protective Order, Plaintiff argues that this restriction is unfair and unduly burdensome because it would "impair American Patents' ability to use its main technical consultant" based in India. Dkt No. 160 at 7. Accordingly, Plaintiff now argues that the United States storage restriction should only apply if the Producing Party "only stores and allows third parties to store such materials within the United States." Id. Because Plaintiff never raised this argument despite multiple opportunities, it should be rejected in the first instance, and the Court need go no further. Even if the Court entertains Plaintiff's new argument, it should still be rejected. Where Defendants store their Highly Confidential Material, including Source Code, for purposes of their -4- 3 business operations has no place in determining how to best protect their Highly Confidential Material in the context of a litigation. Just as the Court recognized that Plaintiff should not be treated the same as a customer of Defendants, nor should Plaintiff be treated the same as Defendants with regard to where it may store Defendants' Highly Confidential Material just because it chose to sue Defendants. As the Court recognized, the Protective Order is designed to strike the balance of allowing Plaintiff access to Defendants' Highly Confidential Material so that it can pursue its case – which was filed in the United States – while protecting Defendants' confidentiality interests and limiting the risks inherent in broader dissemination of their Highly Confidential Material. That balance is easily struck by requiring Plaintiff to store Defendants' Highly Confidential Material, including Source Code, in the United States. Each Defendant makes available and manages access to its Highly Confidential Material in the ordinary course of its business in the geographic locations necessary for its business purposes. It does not follow that just because a Defendant may store Highly Confidential Material, including Source Code, outside the United States so that its engineering teams may access those materials for business purposes, that Plaintiff should be allowed to store those materials outside of the United States for purposes of pursuing this litigation in the United States. Of course, each Defendant can implement security and confidentiality protocols in the context of their ordinary business operations notwithstanding that the materials may be stored in locations outside the United States. Additionally, Plaintiff's arguments as they relate to Highly Confidential Material are belied by Plaintiff's admitted agreement to other provisions of Defendants' protective order. Dkt No. 160 at 8 ("The parties have agreed to pages and pages of provisions limiting who may see confidential information, for what purpose, and under what circumstances."). For example, -5- 3 Plaintiff has agreed to Section 12.a, which dictates that any inspection of Source Code and Chip- Level Schematics will be made in the United States – namely, at the office of the Producing Party's outside counsel or a facility of its designated vendor. Likewise, Plaintiff has agreed to the provisions of Sections 12.p and 12.q prohibiting Source Code and Chip-Level Schematics from being converted into electronic documents and from being electronically transported or transmitted, respectively. Further, in a recent case, Plaintiff's counsel argued against a similar provision preventing a plaintiff from transporting materials designated Highly Confidential Material outside of the United States. See Motiva Patents LLC v. Sony Corp. et al, Case No. 9:18-CV-00180, Dkt. No. 46 at 16 (E.D. Tex. Feb. 4, 2019) (arguing that "Defendants' proposal would also prevent or at least hinder Motiva's ability to retain and use experts or consultants located outside of the United States."). Similar to the defendants in that litigation, Defendants have legitimate concerns about the removal or transfer of their Highly Confidential Material to foreign countries. As those defendants explained, "[t]he laws and procedures of foreign countries may not afford the same level of protections as the laws and procedures of the United States, and Defendants have legitimate and serious concerns regarding other countries' ability and willingness to enforce the Protective Order entered in this case. The Protective Order cannot grant any Federal Court personal jurisdiction over persons located in foreign countries necessary to enforce the Protective Order." Id. at 28. The court rejected Plaintiff's counsel's argument in that case and prohibited such protected material from leaving or being viewed outside the United States. See Motiva Patents, Dkt. No. 75 at Section 29 (E.D. Tex. Apr. 09, 2019) ("No Protected Material designated RESTRICTED – ATTORNEYS' EYES ONLY or RESTRICTED – CONFIDENTIAL SOURCE CODE may leave the territorial boundaries of the United States of America…The viewing of -6- 3 Protected Material designated RESTRICTED – ATTORNEYS' EYES ONLY or RESTRICTED – CONFIDENTIAL SOURCE CODE through electronic means outside the territorial limits of the United States of America is similarly prohibited.") Other courts have similarly recognized the need to prevent information from leaving the United States, endorsing a complete prohibition. See, e.g., Data Engine Techs. LLC v. Google Inc., C.A. No. 14-1115 (D. Del. Apr. 8, 2015) (slip op.) ("Defendant's proposed provision preventing Protected Information from being taken outside the U.S. is ADOPTED, as Defendant's source code is entitled to stringent protection, that source code may be referenced in other Protected Information, and the burden on Plaintiff … is not so strenuous as to outweigh Defendant's interests"); ContentGuard Holdings, Inc. v. Amazon.com, Inc. et al., No. 2:13-cv-01112-JRG, Dkt. No. 152 (E.D. Tex. June 6, 2014) at § 6(c) (strict prohibition on transporting Protected Material to foreign jurisdictions); Uniloc USA, Inc. v. Motorola Mobility LLC, Case No. 2:16-cv-00992-JRG, Dkt. No. 131 (E.D. Tex. May 12, 2017) at § 6(c) (same); Uniloc USA, Inc. v. Apple Inc., No. 2:17-cv-00258-JRG Dkt. No. 74 (E.D. Tex. Sep. 13, 2017) at § 6(c) (same). Moreover, Sections 7.b and 8.c of the Protective Order set forth the persons who can receive HIGHLY CONFIDENTIAL – ATTORNEYS' EYES ONLY material and HIGHLY CONFIDENTIAL – SOURCE CODE, respectively. As an entity, iRunway does not qualify for receipt of Highly Confidential Material, and Plaintiff has not identified a single expert witness/consultant from iRunway who would qualify to receive Highly Confidential Material under Sections 7.b or 8.c. 1 As such, Plaintiff's arguments based on its potential use of iRunway to review Defendants' Highly Confidential Material carry little, if any, weight, as iRunway will 1 None of the cases cited by Plaintiff (Dkt. No. 160 at 8) afforded access to a defendant's Highly Confidential Material by a foreign company as proposed by Plaintiff. -7- 3 likely not be in a position to inspect Defendants' Highly Confidential Material in India or otherwise. Regardless, the restrictions under the Protective Order – to which Plaintiff previously agreed – are in place for a reason and appropriately restrict access to and use and storage of Highly Confidential Material to the United States (except as may be necessary for depositions that may take place outside the United States pursuant to Section 11.a). The risks to Defendants necessarily increase when their Highly Confidential Material is stored in jurisdictions outside the United States by parties with whom Defendants do not have a commercial relationship and over whom a United States court does not have jurisdiction. That is not a risk Defendants should be required to bear in a United States litigation, and Plaintiff's desire to use a low-cost provider in India does not outweigh the risk to Defendants' Highly Confidential Material. C. Plaintiff's argument to permit it to cross-produce one Defendant's Protected Material to another defendant should be rejected. With regard to Section 11.g, Plaintiff's argument boils down to its desire to avoid the obligation of having to present its proof on a defendant-by-defendant basis. Plaintiff wants to serve one infringement expert report and one damages expert report. But, Plaintiff does not, and cannot, argue that one Defendant's confidential information is relevant to its infringement claims against another Defendant. Plaintiff has accused each Defendant's products separately. Yet, Plaintiff's lone objection is that it wants to avoid the burden of having to prepare separate schedules for each Defendant in its expert reports. Plaintiff's desire to avoid extra work falls far short of the cause sufficient to justify cross-production of the Defendants' Protected Materials. Under today's joinder rules, the configuration of this case, with multiple defendants, is the exception rather than the norm. But prior to the America Invents Act, it was often the other way around, with multiple defendants named in the same suit, as plaintiffs sought to avoid multiple -8- 3 filing fees. But that did not mean that the plaintiff was able to freely cross-produce confidential information amongst the defendants. Rather, in the context of expert reports, the typical practice for patentees was to serve a base schedule common to all defendants, but to serve separate schedules or appendices for each defendant that contained their respective confidential information. Plaintiff has not, and cannot, offer any reason why it cannot do that here. As for Plaintiff's arguments regarding trial, at best, they are premature. The structure and composition of trial can evolve over the life of the case – e.g., Plaintiff and one Defendant, Lenovo, recently notified the Court of their settlement (Dkt. No. 158). And, regardless, there are procedures and protocols to address the use of the parties' confidential information at trial that can be considered at the pre-trial conference. Lastly, Section 11.g includes a specific procedure for Plaintiff to seek relief from the restriction regarding cross-production. Although Plaintiff objects that this procedure is inconvenient for it, such objection should not trump Defendants' confidentiality concerns. 2 Accordingly, the Court should adopt Defendants' proposal for Section 11.g. III. CONCLUSION For the reasons stated herein, Defendants respectfully request that the Court reject Plaintiff's proposed modifications to the Defendants' Protective Order and adopt the Defendants' Protective Order submitted as Exhibit A to Defendants' Notice of Submission (Dkt. No. 159-1). 2 Other courts have entered similar restrictions on cross-use of defendants' protected information and have included a nearly identical procedure for plaintiff to seek relief from the restriction. See, e.g., Evolved Wireless, LLC v. HTC Corp., et al., No. 15-cv-543, Dkt. No. 37 at 7 (D. Del. Mar 15, 2016). -9- 3 Dated: October 7, 2019 Respectfully submitted, /s/ Tyler T. VanHoutan Tyler T. VanHoutan Texas Bar No. 24033290 Eric S. Schlichter Texas Bar No. 24007994 MCGUIREWOODS LLP 600 Travis St., Suite 7500 Houston, TX 77002 (713) 571-9191 (713) 571-9652 (Fax) tvanhoutan@mcguirewoods.com eschlichter@mcguirewoods.com Rebecca Levinson (Admitted Pro Hac Vice) MCGUIREWOODS LLP 2001 K Street N.W., Suite 400 Washington, DC 20006 (202) 828-2816 (202) 828-3322 (Fax) rlevinson@mcguirewoods.com Paige Arnette Amstutz Texas Bar No. 00796136 SCOTT, DOUGLASS & MCCONNICO, LLP 303 Colorado St., Suite 2400 Austin, TX 78701 (512) 495-6300 (512) 495-6399 (Fax) pamstutz@scottdoug.com Counsel for MediaTek Inc., MediaTek USA Inc., Broadcom Pte Ltd., Broadcom Corporation, NXP Semiconductors N.V., NXP B.V., NXP USA, Inc., Qualcomm Incorporated and Qualcomm Technologies, Inc. - 10 - 3 Gilbert A. Greene Jonah D. Mitchell (Admitted Pro Hac Vice) Texas Bar No. 24045976 Doyle B. Johnson (Admitted Pro Hac Vice) Pierre J. Hubert Osman Mohammed (Admitted Pro Hac Vice) Texas Bar No. 24002317 REED SMITH LLP DUANE MORRIS LLP 101 2nd St., Suite 1800 900 S. Capital of Texas Hwy, Suite 300 San Francisco, CA 94105 Austin, TX 78746 (415) 543-8700 (512) 277-2300 (415) 391-8269 (Fax) 277-2301 (Fax) jmitchell@reedsmith.com BGreene@duanemorris.com dbjohnson@reedsmith.com PJHubert@duanemorris.com omohammed@reedsmith.com Kevin Anderson (Admitted Pro Hac Vice) R. Jeffrey Layne DUANE MORRIS, LLP Texas Bar No. 00791083 505 9th St., N.W., Suite 1000 Megan Alter Hudgeons Washington, DC 20004-2166 Texas Bar No. 24001645 (202) 776-7800 REED SMITH LLP kpanderson@duanemorris.com 111 Congress Ave., Suite 400 Austin, TX 78701 Counsel for NXP Semiconductors N.V., NXP (512) 563-1816 B.V., NXP USA, Inc., Qualcomm Incorporated (512) 623-1802 (Fax) and Qualcomm Technologies, Inc. mhudgeons@reedsmith.com jlayne@reedsmith.com Counsel for Qualcomm Incorporated and Qualcomm Technologies, Inc. Eric W. Schweibenz (Admitted Pro Hac Vice) John S. Kern (Admitted Pro Hac Vice) Alexander B. Englehart (Admitted Pro Hac Vice) OBLON, MCCLELLAND, MAIER & NEUSTADT, LLP 1940 Duke Street Alexandria, VA 22314 (703) 413-3000 eschweibenz@oblon.com jkern@oblon.com aenglehart@oblon.com Counsel for MediaTek Inc. and MediaTek USA Inc. - 11 - 3 CERTIFICATE OF SERVICE Pursuant to the Federal Rules of Civil Procedure and Local Rule CV-5, I hereby certify that all counsel of record who have appeared in this case are being served on this 7th day of October, 2019, with a copy of the foregoing via the Court's CM/ECF system. /s/ Tyler T. VanHoutan Tyler T. VanHoutan - 12 -