LUMINARA WORLDWIDE, LLC, Plaintiff, v. LIOWN ELECTRONICS CO. LTD. et al., Defendants Civil No. 14–3103 (SRN/FLN) United States District Court, D. Minnesota Signed January 09, 2016 Filed January 11, 2016 Counsel Courtland Merrill and Dan Hall for Plaintiff. Kenneth Halpern and Tara Norgard for Defendants. Noel, Franklin L., United States Magistrate Judge ORDER *1 THIS MATTER came before the undersigned United States Magistrate Judge on December 21, 2015 on Plaintiff's motion to compel (ECF No. 317) and Defendants' discovery motion (ECF No. 333). For the reasons set forth below, both motions are GRANTED in part and DENIED in part. I. LUMINARA'S MOTION TO COMPEL (ECF NO. 317) A. Identity of document custodians Luminara first seeks an order compelling Liown to identify the custodians of documents it produced in discovery. Mem. in Supp. 16, ECF No. 319. In its opposition memorandum, Liown stated that it “agrees to provide all of the custodial information it has to Luminara.” Opp'n Mem. 4, ECF No. 330. Given this agreement by Liown, Luminara's motion to compel the production of custodian information is granted to the extent required by the ESI Protocol governing discovery. See ECF No. 105 ¶ 4(A)(iii) (stating that a document's custodian must be produced to the extent such information exists in the document's metadata). The Court observes, however, that Liown has volunteered to produce non-metadata custodian information to Luminara to the extent such information is known to Liown. Any custodial information must be disclosed within 21 days of the date of this Order. B. Sales information for infringing products Second, Luminara seeks updated sales information of Liown's products that allegedly infringe on Luminara's patents. ECF No. 319 at 19–22. Liown has acknowledged that such information is relevant, but has only agreed to update the information if Luminara agrees to do the same. See ECF No. 330 at 5. However, a “tit for tat” argument is not a valid defense to the production of relevant information. Liown must provide complete and up-to-date information regarding the sales of its products that Luminara claims infringe on the patents-in-suit, including, but not limited to, the number of accused products sold, the customers who purchased the products, and the prices of sales and profits earned. Such disclosures must be made within 21 days of the date of this Order. C. Liown's company-level financial data Third, Luminara seeks “company-level” financial data from Liown. ECF No. 319 at 22–23. Specifically, Luminara seeks “[a]ll profit and loss statements of each Liown Party since January 1, 2005,” and “[d]ocuments that identify on a month-by-month and year-by-year basis, the gross profits, net profits, and operating costs of each Liown Party since January 1, 2007 related to the sale of Flameless Candle Products.” Id. at 22. Liown objects to these requests as irrelevant to Luminara's damages claims. ECF No. 330 at 10–11. “Upon a showing of infringement, a patentee is entitled to ‘damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer.’ ” ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860, 868 (Fed. Cir. 2010) (quoting 35 U.S.C. § 284). “[T]he trial court must carefully tie proof of damages to the claimed invention's footprint in the market place.” Id. at 869. “Any evidence unrelated to the claimed invention does not support compensation for infringement but punishes beyond the reach of the statute.” Id. *2 After reviewing the record, the Court concludes that Luminara's request for company-level financial data encompasses information unrelated to damages for the patents-in-suit. Such information is not relevant to Luminara's claims. To the extent Luminara's motion seeks company-wide financial data for any of the Liown Parties, the motion is denied. D. Documents from Kowalec, Moody, and Rushing Fourth, Luminara seeks to compel the production of emails sent to or from Matt Kowalec, Brett Moody, and Alan Rushing—three individuals associated with Defendant Liown Beauty Electronics. ECF No. 319 at 24–28. Liown objects to these requests, arguing that they are untimely under the ESI Protocol. ECF No. 330 at 6–10. As discussed in previous Orders by the Court, the ESI Protocol states that custodians of electronically stored information were to be disclosed no later than March 1, 2015. See ECF No. 105 ¶ 3(A)(i). There is no dispute that Kowalec, Moody, and Rushing were not identified as custodians by the March 1 deadline. Luminara argues that they were not identified because Liown provided misleading initial disclosures and discovery responses that hid the relevance of Kowalec, Moody, and Rushing. ECF No. 319 at 24–25. Had Liown provided truthful disclosures and responses, Luminara argues, it would have known of the individuals' relevance prior to the deadline. Id. Liown opposes this characterization of its discovery responses. ECF No. 330 at 8–9. Assuming without deciding that Liown's initial disclosures and discovery responses were misleading, it is undisputed that Luminara discovered the relevance of Kowalec, Moody, and Rushing by March 18, 2015. See ECF No. 319 at 25 (acknowledging that Liown supplemented its interrogatory responses on March 18, 2015 to state that Kowalec, Moody, and Rushing were former employees of Liown Beauty Electronics). Indeed, Luminara deposed Kowalec in April 2015. ECF No. 330 at 9. Luminara has provided no explanation for why it waited until November 18, 2015—eight months after it discovered the relevancy of Kowalec, Moody, and Rushing—before it sought to compel documents from these custodians. Given that Luminara had an ample opportunity to obtain this information after Liown disclosed Kowalec, Moody, and Rushing's employment status, Luminara's motion to compel the production of such information is denied. See Fed. R. Civ. P. 26(b)(2)(C)(ii). E. Information related to Liown's compliance with the Court's preliminary injunction Luminara seeks documents related to Liown's compliance with the Court's preliminary injunction dated April 20, 2015. ECF No. 319 at 27–28. Specifically, Luminara seeks documents in response to Request No. 31 (concerning efforts “to stop selling, manufacturing or offering to sell any Moving Flame Candles as a result of the Disney patents”), Request No. 37 (“communications between you and any other person for whom you manufacture, distribute or sell Moving Flame Candles”), Request No. 38 (“communications between you and any other person to whom you have distributed, sold or offered to sell Moving Flame Candles”), and Request No. 45 (“documents that refer to this lawsuit”). Id. at 28. At the hearing, Liown acknowledged that these requests are relevant even in light of the Federal Circuit's Order vacating the preliminary injunction. Indeed, Liown has agreed to produce any non-privileged communications responsive to these requests. ECF No. 330 at 6. *3 To the extent Luminara seeks documents responsive to Request Nos. 31, 37, 38, and 45, the motion is granted. Such documents must be produced within 21 days of the date of this Order. In the event Liown believes any responsive documents are privileged, Liown must complete a privilege log that complies with the Federal Rules of Civil Procedure and this Court's previous Orders outlining the required contents of a privilege log. See, e.g., Order, ECF No. 292. If such documents do not exist, Liown must state this fact in a formal response to Luminara's requests. F. Discovery served on September 1, 2015 Finally, Luminara seeks to compel the production of discovery responses to its Second Set of Requests for Production and Third Set of Interrogatories to the Liown Parties, and its First Set of Production to Defendants BJ's Wholesale Club, Inc., Von Maur, Inc., Zulily, Inc., Smart Candle, LLC, Tuesday Morning Corp., and the Light Garden, Inc. that were served on September 1, 2015. ECF No. 319 at 29. Although Liown believes such requests were untimely, it has nevertheless agreed to respond to these requests. Luminara's motion to compel responses to the aforementioned discovery requests is therefore granted. Responses must be served within 21 days of the date of this Order. II. LIOWN'S MOTION TO OVERRULE LUMINARA'S PRIVILEGE OBJECTION TO THE PRODUCTION OF PETER SMITH DOCUMENTS AND TO COMPEL PRODUCTION OF LUMINARA LICENSE NEGOTIATION DOCUMENTS (ECF NO. 333) A. Peter Smith documents On September 25, 2015, Liown propounded a subpoena on Candella's founder and former CEO Peter Smith, seeking documents and testimony. Mem. in Supp. 6, ECF No. 334. Smith produced documents in response to the subpoena on October 23, and 26, 2015. Id. On October 27, however, Luminara's lawyers produced a privilege log, listing 55 responsive documents which Luminara claimed were protected by attorney-client privilege. Id. According to Luminara, the confidential communications requested by Liown were between Smith and Luminara's attorneys while Smith was an officer of the company and are therefore protected by Luminara's attorney-client privilege. Opp'n Mem. 7, ECF No. 342. Liown argues that because Luminara made no effort to maintain the confidentiality of the documents at issue once Smith left the company in 2012, such documents are no longer confidential and therefore cannot be privileged. ECF No. 334 at 7. In support of its argument, Liown cites to Shukh v. Seagate Tech., LLC, 872 F. Supp. 2d 851, 859 (D. Minn. 2012), for the proposition that an employer must take “reasonable measures to prevent disclosure of the privileged documents.” In Shukh, the plaintiff Shukh made copies of over 49,000 pages of defendant Seagate's documents after he was notified that his employment with Seagate had been terminated. Shukh then initiated an action against Seagate related to his termination from the company. Sixteen months after Shukh's termination, Seagate sought and received a court order requiring Shukh to return the 49,000 pages of documents to Seagate. Later, in response to discovery requests, Seagate produced some of the documents he had taken from the company. Seagate, however, continued to withhold 575 documents on the basis of privilege. Shukh moved to compel the production of these documents, arguing, among other things, that Shukh waived its privilege by delaying sixteen months before seeking the return of the documents. In concluding that Seagate had not waived its privilege over the documents, the court observed that Seagate made regular attempts to enforce the document return provision in Shukh's employment contract, made numerous requests for the return of the documents, and attempted to prevent Shukh from taking the documents following his termination notice. This, the court held, was sufficient to show that Seagate had not waived the privilege. Id. at 858–59. *4 Liown argues that unlike the defendant in Shukh, Luminara did nothing to protect the confidentiality of the withheld documents and therefore waived its right to assert attorney-client privilege over them. ECF No. 334 at 8. However, unlike Shukh, which involved an employee who was involved in litigation directly adverse to the defendant, Smith was the founder and former CEO of Candella, and the documents at issue were not requested in relation to any litigation between Smith and Luminara. Given that Smith was bound by a duty to maintain the confidences of his former employer, see Eaton Corp. v. Giere, 971 F.2d 136, 141 (8th Cir. 1992), Luminara had no reason to believe that the communications at issue would not remain confidential. The fact that Luminara did not attempt to retrieve the documents from Smith does not constitute a waiver of the privilege given that there is no evidence that Smith's and Luminara's interests or loyalties ever diverged. The attorney-client privilege belongs to Luminara, see Commodity Futures Trading Comm'n v. Weintraub, 471 U.S. 343, 348–49 (1985), and it is therefore proper for Luminara to assert its privilege over these documents. At the hearing, Liown argued that Smith no longer has an obligation to keep information he obtained at Luminara confidential pursuant to a release agreement between Smith and Luminara. It appears, however, that such agreement arose out of a shareholder dispute between Candella and Smith. It is not relevant to the issue of confidentiality of the documents at issue. Based on the foregoing, the Court concludes that the documents retained by Peter Smith remain privileged and therefore need not be produced. Luminara must, however, provide Liown with a revised privilege log that complies with the Federal Rules of Civil Procedure and this Court's previous Orders outlining the required contents of a privilege log. See, e.g., Order, ECF No. 292. B. Disney/Luminara license negotiation documents Liown also seeks to compel Luminara to produce its withheld documents related to negotiations between Disney and Luminara to license the patents-in-suit. ECF No. 334 at 11–16. The issue before this Court is whether such documents are privileged pursuant to the common interest doctrine. This issue is identical to Liown's previous motion to compel similar documents from Disney, which is currently before the Court on remand from Judge Nelson. See Mot. to Compel, ECF No. 268; Order, ECF No. 292; Mem. & Op. Order, ECF No. 332; Order, ECF No. 341. As discussed in both the Court's October 2, 2015 and December 4, 2015 Orders, “[t]he attorney-client privilege extends only to confidential communications made for the purpose of facilitating the rendition of legal services to the client.” United States v. Horvath, 731 F.2d 557, 561 (8th Cir. 1984). Its purpose is to encourage “full and frank communication between attorneys and their clients.” Upjohn Co. v. United States, 449 U.S. 383, 389 (1981). However, because the attorney-client privilege obstructs the truth-finding process, it is construed narrowly and “protects only those disclosures—necessary to obtain legal advice—which might not have been made absent the privilege.” Westinghouse Elec. Corp. v. Republic of Philippines, 951 F.2d 1414, 1423–24 (3d Cir. 1991) (citing Fisher v. United States, 425 U.S. 391, 403 (1976)); see also Diversified Indus., Inc. v. Meredith, 572 F.2d 596, 602 (8th Cir. 1977) (“While the privilege, where it exists, is absolute, the adverse effect of its application on the disclosure of truth may be such that the privilege is strictly construed.”). The Court observes that both the Federal Circuit and the Eighth Circuit have expanded the privilege to include certain communications made between a client/attorney and a third party. See, e.g., In re Regents of the Univ. of Cal., 101 F.3d 1386 (Fed. Cir. 1996) (recognizing that the attorney-client privilege includes communications made between an inventor/patentee and an optionee/potential licensee pursuant to the common interest doctrine); In re Bieter, 16 F.3d 929 (8th Cir. 1994) (finding that communications between a party and an independent consultant were covered by the attorney-client privilege). *5 One of the ways courts have expanded the scope of the attorney-client privilege is through the “common interest doctrine.” The Eighth Circuit has described the common-interest doctrine as follows: If two or more clients with a common interest in a litigated or non-litigated matter are represented by separate lawyers and they agree to exchange information concerning the matter, a communication of any such client that otherwise qualifies as privileged ... that relates to the matter is privileged as against third persons. Any such client may invoke the privilege, unless it has been waived by the client who made the communication. In re Grand Jury Subpoena Duces Tecum, 112 F.3d 910, 922 (8th Cir. 1997). As recognized by the Federal Circuit, the common interest doctrine evolved from the situation where the same attorney represented the interests of two or more entities in the same matter. In re Regents of Univ. of Cal., 101 F.3d 1386, 1389 (Fed. Cir. 1996). These entities are viewed as joint clients for the purposes of privilege. Id. This doctrine “typically has been applied to overcome what would otherwise have constituted a waiver of confidentiality because a communication had been shared between two clients.” Id. The Federal Circuit has recognized that the common interest doctrine may be applied in connection with patent rights. See Id. (citing Baxter Travenol Labs., Inc. v. Abbott Labs., No. 84–c–5103, 1987 WL 12919, at *1 (N.D. Ill. June 19, 1987) (“A community of legal interests may arise between parties jointly developing patents; they have a common legal interest in developing the patents to obtain greatest protection and in exploiting the patents.”)). The Federal Circuit has observed that in order for the common interest doctrine to apply, the two entities “must share a common legal interest, or have a community of interest, with respect to the subject of the communications.” Id. at 1390. This interest must be identical, not similar, and be legal, not solely commercial. Id. It is well established that “the party who claims the benefit of the attorney-client privilege has the burden of establishing the right to invoke its protection.” S&S Forage & Equip. Co. v. Up North Plastics, Inc., No., 1999 WL 34967061, at *4 (D. Minn. Oct. 25, 1999) (quoting Hollins v. Powell, 773 F.2d 191, 196 (8th Cir. 1985)). Therefore, in order to demonstrate that documents and/or communications are protected by the common interest doctrine, it is Disney's burden to show (1) that it had a common interest with Candella; (2) that the communications at issue were designed to further that interest; and (3) that the nature of the interest was legal, and not solely commercial. After reviewing the record, the Court concludes that Luminara has failed to meet its burden to show that the common interest doctrine applies to the communications and documents identified in Luminara's privilege log that were disclosed to Disney and relevant to the Disney–Candella license negotiations. There is no information in the record explaining the negotiation process between the two companies (e.g., whether the companies were represented by separate counsel throughout the negotiations) or whether the entities had competing interests throughout the negotiation. Indeed, Luminara has not provided any information to support an inference that its negotiations with Disney were anything other than an arms-length commercial transaction. *6 Although Luminara cites to Regents to support its argument that the common interest doctrine applies to communications between a patent owner and a licensee, Regents is distinguishable. In Regents, the optionee/licensee assumed direct responsibility for prosecuting the pending patent applications. 101 F.3d at 1389. The Federal Circuit therefore concluded that the patent owner and the optionee/licensee shared not only a commercial interest, but also the common legal interest of obtaining valid and enforceable patents. See Id. at 1390. In this case, however, there is nothing in the record to suggest that Candella/Luminara acquired any ownership rights in the patents-in-suit or that it began prosecuting the pending patent applications covered by the licensing agreement. Indeed, there is nothing in the record that any common interests between Disney and Candella/Luminara during the negotiations of the licensing agreement were in fact legal. Rather, the limited record before the Court suggests that the negotiations were strictly commercial in nature. Accordingly, the Court concludes that Luminara has not met its burden to demonstrate that its communications with Disney are protected by the common interest doctrine. Luminara must produce to Liown any relevant documents or communications responsive to Liown's discovery requests that were disclosed to Disney during the Parties' negotiations over the licensing agreements covering the patents-in-suit. This does not mean, however, that Luminara must produce every document listed on its privilege log. Any privileged documents that are unrelated to the licensing agreement and/or were never disclosed to Disney need not be produced. III. ORDER Based upon the foregoing, and all of the files, records, and proceedings herein, IT IS HEREBY ORDERED that: A. Luminara's motion to compel (ECF No. 317) is GRANTED in part and DENIED in part as follows: 1. To the extent Luminara seeks custodian information for discovery produced by Liown, the motion is GRANTED as required by the ESI Protocol (ECF No. 105). 2. To the extent Luminara seeks updated sales information for Liown's products that allegedly infringe on the patents-in-suit, the motion is GRANTED. 3. To the extent Luminara seeks discovery related to Liown's company-level financial data, the motion is DENIED. 4. To the extent Luminara seeks ESI discovery from Kowalec, Moody, and Rushing, the motion is DENIED. 5. To the extent Luminara seeks discovery related to Liown's compliance with the Court's preliminary injunction (Request Nos. 31, 37, 38, and 45), the motion is GRANTED. 6. To the extent Luminara seeks responses to discovery it served on Defendants on September 1, 2015, the motion is GRANTED. 7. Any documents or disclosures required by this Order must be produced within 21 days of the date of this Order. 8. In all other respects, Luminara's motion is DENIED. B. Liown's motion (ECF No. 333) is GRANTED in part and DENIED in part as follows: 1. To the extent Liown seeks the Court to overrule Luminara's privilege objection over documents retained by Peter Smith, the motion is DENIED. 2. To the extent Liown seeks to compel the production of documents retained by Luminara related to the Disney–Candella license negotiations, the motion is GRANTED. 3. Any documents or disclosures required by this Order must be produced within 21 days of the date of this Order.