TEXASLDPC INC., Plaintiff, v. BROADCOM INC., LSI CORPORATION, AVAGO TECHNOLOGIES U.S. INC., Defendants C.A. No. 18-1966-SB United States District Court, D. Delaware Signed June 30, 2022 Counsel Gregory Robert Booker, Joseph B. Warden, Warren K. Mabey, Jr., Fish & Richardson, P.C., Wilmington, DE, Bret T. Winterle, Pro Hac Vice, David H. Hoffman, Pro Hac Vice, Lawrence K. Kolodney, Pro Hac Vice, Michael R. Headley, Pro Hac Vice, Rodeen Talebi, Pro Hac Vice, for Plaintiff. Adam Wyatt Poff, Robert M. Vrana, Young, Conaway, Stargatt & Taylor LLP, Wilmington, DE, Ramy E. Hanna, Houston, TX, Steven J. Rizzi, Pro Hac Vice, for Defendants. Rychlicki, Helena, Special Master SPECIAL MASTER RULINGS AND RECOMMENDATIONS REGARDING PLAINTIFF'S DISPUTE AS TO DEFENDANTS’ SALES INFORMATION RESPONSES Public Version June 30, 2022 *1 Pending before the Special Master are discovery disputes raised by Plaintiff regarding Defendants’ responses to Plaintiff's requests for certain sales information. D.I. 268. Specifically, Plaintiff asks that I order Defendants to provide (a) complete sales data for what Defendants call “overseas sales” of the Accused Products for the damages period; (b) internal sales and other financial reports or budgets covering the Accused Products; (c) documents and reports related to “design wins” and other US sales activity related to foreign entities; and (d) full responses to Interrogatory Nos. 2, 3, 5, 9 & 11. Defendants responded by Letter Brief and I held a hearing regarding this dispute on June 16, 2022. The following day, Plaintiff forwarded an unsolicited email with information it stated was in response to Defendants’ criticism that Plaintiff “hadn't sufficiently tied an end product to a listed ‘BCM’ model number....” Defendants then forwarded an email objecting to Plaintiff's new information. For purposes of this Rulings and Recommendations, I considered neither email nor any information contained in them. I have reviewed and considered the parties’ letter briefs and attached exhibits, cited case law, relevant portions of the Third Amended Complaint, and the June 16 hearing transcript. I. BACKGROUND On March 31, 2022, Plaintiff filed a motion to amend its complaint (to become the Third Amended Complaint) noting in a letter to the Court that the amendments were made to “[s]upplement prior claims of direct infringement to assert that sales recorded by Defendants as allegedly non-U.S. sales are, in fact, U.S. sales” and “[s]upplement prior claims of induced and contributory indirect infringement by adding allegations against Defendants that sales of Accused Products allegedly outside the U.S. are infringing....” See Plaintiff's Letter Brief dated June 3, 2022, at 1. Defendants opposed the motion and the Court denied certain amendments to the proposed Third Amended Complaint (the “3AC”). The Court, however, allowed those portions of the proposed amendments in the 3AC that supported the above stated reasons. II. STANDARD OF REVIEW Federal Rule of Civil Procedure 26(b)(1) defines the general scope of discovery: Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Information within this scope of discovery need not be admissible in evidence to be discoverable. Fed. R. Civ. P. 26(b)(1). When a party objects to discovery requests, the burden falls on the party seeking the discovery to show the relevance of the information requested. Discovery is relevant, inter alia, if used to flesh out a pattern of facts already known to a party relating to an issue necessarily in the case. However, requested information is not relevant if the inquiry is based on the party's mere suspicion or speculation. *2 Once relevance is shown, the party opposing discovery may show why discovery, even if relevant, should not be permitted. Tessera, Inc., et al. v. Broadcom Corp., Civil Action No. 16-380-LPS-CJB, 2017 WL 4876215, at *2 (D. Del. Oct. 24, 2017) (cleaned up). The Supreme Court has explained that the term “induce” as it is used in [35 U.S.C.] 271(b) means to lean on; to influence; to prevail on; to move by persuasion. Each definition requires successful communication between the alleged inducer and the third-party direct infringer. We have further held that to prevail under a theory of indirect infringement, plaintiff must first prove that the defendants’ actions led to direct infringement of the patents-in-suit. The plaintiff has the burden of showing that the alleged infringer's actions induced infringing acts. Induced infringement occurs only if the party being induced directly infringes the patent. Under this precedent, a finding of induced infringement requires actual inducement. The inducement may be proven via circumstantial evidence. Power Integrations, Inc. v. Fairchild Semiconductor Int'l, Inc., 843 F.3d 1315, 1331 (Fed. Cir. 2016) (cleaned up). III. DISCUSSION On June 23, 2022, the Court adopted my recommendation that it grant Plaintiff's “Renewed motion to compel relevant materials and information (e.g., source code, unit sales, revenues, costs, and other relevant documents & data), including those responsive to DDS 4(b), for all of the “more than 1000 Wi-Fi products” Defendants admitted fall within the description of accused Wi-Fi products in TexasLDPC's DDS 4(a) disclosure.” See D.I. 297 and D.I. 248, at 3. A. Defendants Must Supplement Their Document Production 1. Plaintiff Has Established the Relevance of Worldwide Sales Data Via Its Third Amended Complaint Plaintiff avers that via “the allegations added in the 3AC, TexasLDPC has now shown the relevance of the requested financial and sales-related documents and info for sales made to entities outside the U.S. that are responsive to RFP No. 54, 55, 57 &58....” Plaintiff's Letter Brief dated June 3, 2022, at 3. Defendants respond that Plaintiff's 3AC includes “unsupported and baseless allegations regarding Defendants’ business practices....” Defendants’ Letter Brief dated June 10, 2022, at 1. In addition Defendants assert that Tessera, Inc., et al. v. Broadcom Corp., Civil Action No. 16-380-LPS-CJB, 2017 WL 4876215 (D. Del. Oct. 24, 2017) “governs the question of whether Plaintiff has made a sufficient showing [beyond mere suspicion or speculation] to obtain discovery of non-U.S. sales. Id. Defendants criticize Plaintiff's citation to four documents from Defendants’ production in support of Plaintiff's allegations regarding Defendants inducement of non-U.S. entities’ infringement of the Accused Products. Defendants state that the documents are unauthenticated and “plucked” from their production. Defendants’ criticism of the documents that Plaintiff cited in its 3AC is not well taken. Plaintiff cited the documents it found in Defendants’ production.[1] • Exhibit 11 is a portion of an undated draft of a larger document prepared by an outside auditor. Defendant complains that some of the information provided in this document includes a note to confirm the information. Defendants conclude that this document cannot support Plaintiff's allegations. I disagree. Plaintiff noted at the June 16 Hearing that a final version of this document was not produced. It is also not unexpected that an auditor would have been given preliminary information and while drafting its document make a note to confirm. *3 • Exhibit 12 is dated July 21, 2014, and bears a footer, Avago Technologies, which Plaintiff asserts in the 3AC refers to Avago Technologies International Sales Pte. Ltd. Defendants note that the Court denied Plaintiff's motion to add this entity to the 3AC and concluded that Defendants may not be held responsible “for the independent acts of non-parties. Defendants’ Letter Brief dated June 17, 2022, at 2. Defendants claim this means that the activities of this entity are irrelevant. But Plaintiff alleges that this entity is one of many that Defendants know and encourage to sell products that contain the Accused Products to the U.S. market. • Exhibit 13 bears the title “Broadcom OECD Transfer Pricing Master File Short Fiscal Year 2016 (January 1, 2016 – October 30, 2016).” Defendants assert no Accused Products are referenced. This documents refers to Broadcom Corporation that included entities around the world. Broadcom Corporation is a predecessor entity to Defendant Broadcom, Inc. • Exhibit 14 is a document that Plaintiff asserts outlines the close collaboration between various overseas subsidiaries and the named Defendants. Defendants assert no Accused Products are referenced in this document. If these documents were the only support that Plaintiff had for its 3AC allegations of induced infringement, I might rule differently. But they are not the only support for the allegations. Plaintiff also gives examples of: • Defendants’ press releases and video interviews touting the use of the Accused Products in products that it alleges are sold to the U.S. market by overseas entities such as Extreme Networks, Aerohive, Netgear, and Linksys; • Defendants’ technical support for Extreme Networks and other overseas entities; and • Defendants’ advertisements regarding plans to distribute the Accused Products to U.S. customers. See 3AC at ¶¶ 377-412. Defendants, relying on Tessera, Inc., et al. v. Broadcom Corp., Civil Action No. 16-380-LPS-CJB, 2017 WL 4876215 (D. Del. Oct. 24, 2017), assert that Plaintiff has cited to “mere suspicion or speculation” in support of its allegations regarding induced infringement. Id. at 3. Defendants also assert that Plaintiff has provided no information regarding a particular Accused Product sold overseas and later sold back into the U.S. Id. at 5. I disagree with Defendants that Tessera’s holding is binding here. I instead look to Power Integrations, Inc. v. Fairchild Semiconductor Int'l, Inc., 843 F.3d 1315 (Fed. Cir. 2016) for guidance. There, the Federal Circuit found that plaintiff could not directly link the evidence it presented regarding affirmative acts defendant took to induce third parties to import the patented product into the U.S. to products that plaintiff showed directly infringed. The Court concluded, however, “it was sufficient to allow the jury to find that [defendant] had induced its customers ... to infringe as a class. This is all that we require.” Id. at 1335 (citation omitted). Plaintiff has shown enough evidence, even if circumstantial, to warrant grant of its motion under Power Integrations. That is all I will require. Plaintiff will have to prove at trial that Defendants induced infringement, but for now, Plaintiff should have the documents. Defendants must produce documents and information regarding all of their worldwide sales of the Accused Products including transactional financial data. Therefore, I GRANT Plaintiff's motion that Defendants supplement their document production to include worldwide sales of the Accused Products in response to Plaintiff's RFP Nos. 54, 55, 57, and 58. 2. Plaintiff's Demand for Internal Sales and Other Financial Reports or Budgets Covering the Accused Product is Proportional to the Needs of the Case *4 Plaintiff asserts that Defendants are unilaterally limiting the scope and format of sales discovery. Plaintiff has specifically requested periodic (e.g., monthly) internal sales and other financial reports or budgets covering the Accused Products. These are documents that are created and maintained in the ordinary course of business. Defendants respond that they have produced spreadsheets with entries detailing the transactional and sales data for the Accused Products. That is no longer true, however, in light of the Court's Order of June 23, 2022 (D.I. 297) and my ruling above. Therefore, Defendants must update those spreadsheets to include these additional Accused Products and additional sales. Defendants also assert that request is not proportional to the needs of the case. While the data presented in the spreadsheets may be accurate (and I accept Defendants’ statement regarding that issue), it does not obviate the need for sales and other financial reports or budgets. The types of documents that Plaintiff requests are valuable because they are created at the time the events occurred and may include information beyond the sales numbers such as sales performance and targets, revenue growth, or previously set goals and achievement status. This information cannot be ascertained from spreadsheets of raw data. I find that these kinds of documents will have responsive information that is relevant to the case and that production of them is proportional to those needs. If some of the documents do not exist because they were destroyed or lost in the ordinary course of business, Defendants should so note that in their response. Therefore, I GRANT Plaintiff's motion that Defendants supplement their document production to include internal sales and other financial reports covering the Accused Products in response to Plaintiff's RFP Nos. 54, 55, 57, and 58. 3. The Parties Met and Conferred Regarding “Design Win” Documents; Defendants Must Produce Them The parties disagree whether there should have been a second meet and confer to discuss the definition of the term “design win” before this dispute was presented to the Special Master. Defendants assert that, because they asked for Plaintiff's definition of the term and Plaintiff did not respond, a second meet and confer was required. During the June 16, 2022 hearing, I announced my decision regarding this dispute. I will go ahead and tell you what my ruling on design wins is going to be now, and I will explain it ... as to my reasoning -- but I want [Defendants to produce design win documents as their] employees define that term. So if a salesman [for Defendants] says this is what a design win is, let's have those documents. If an engineer [for Defendants] says [ ] I know what this design win is, that gets produced. If a marketing person [for Defendants] says a design win is such and so, let's have those documents. [I]t's reasonable to me that they receive these documents. So that's [ ] my ruling. [The reasons for this ruling are as follows: I disagree with Defendants that this issue should not have been brought at this time because there was no meet and confer. The parties] did have a meet and confer. Yes, after that meet and confer there were some e-mails.... I understand Defendants’ position that [Plaintiff] never gave [Defendants] a definition [for design win as requested in the e-mail exchange. Plaintiff] wanted [Defendants to produce] what [Defendants] considered design wins. And so that's what I am ordering. *5 [Defendants assert that after last year's] meet and confer happened -- and there was a meet and confer -- there were e-mails back and forth, and so it's not right [to bring this dispute now] because there hasn't been a second meet and confer. But the truth is that there was a meet and confer. [Defendants, through their counsel at this hearing have admitted that they know what a design win is even if different departments and/or employees have a slightly different definition of the term.] And the fact that the Plaintiff's counsel did not bring this issue up until now doesn't mean that they don't get to do it. They get to bring their issues of discovery disputes when they make sense [to Plaintiff]. And so if they bring them later rather than sooner, that's what they do. So that's my order, is that Defendants are to produce design win documents in response to RFP 27 to Plaintiff. All design win documents related to the Accused Products as now defined and including both U.S. and overseas sales must be produced. Therefore, I GRANT Plaintiff's motion that Defendants supplement their document production in response to Plaintiff's RFP No. 27. B. Defendants Must Supplement Certain of Their Responses to Plaintiff's Interrogatories 1. Plaintiff's Interrogatory No. 2 (“Rog 2”) Rog 2 requests: “For each product identified in response to Interrogatory No. 1, identify the Entity responsible for design, development, manufacture, marketing, sale, and importation into the United States.” On March 24, 2022, Defendants provided a supplemental response to Rog 2. Plaintiff avers that Defendants’ supplemental response to Rog 2 does not provide sufficient information and that Defendants’ assertion that the burden of ascertaining such information is substantially the same for Plaintiff as it is for Defendants is wrong. It asks that I order Defendants to further supplement. Defendants respond that I should deny Plaintiff's request for failure to meet and confer on this issue. In addition, Defendants assert that Rog 2 is unduly burdensome and not proportional to the needs of the case. Finally, Defendants aver that Plaintiff has not identified the relevance of any additional information sought by Rog 2 and that they do not retain repositories of any additional information. The information requested does not necessarily have to be stored in a “repository,” whatever that terms means. It may be contained in documents in file folders. But, because I have ordered Defendants to produce documents as outlined above in Section III.A. that I believe should provide further information, supplementation of Rog 2 is premature. If, after reviewing Defendants’ production, Plaintiff believes that Defendants have further information responsive to Rog 2, it should meet and confer with Defendants. If Plaintiff is still dissatisfied with Defendants’ response, it then should bring the issue to my attention. Therefore, I DENY WITHOUT PREJUDICE Plaintiff's motion that Defendants supplement Rog 2. 2. Plaintiff's Interrogatory No. 3 (“Rog 3”) Rog 3 requests: “For each product identified in response to Interrogatory No. 1, identify and describe the role of each intermediary (e.g., packaging, testing, programming, importer, wholesaler, distributor, and retailer) involved in the transfer of the product from the wafer manufacturer to the end user.” *6 On March 24, 2022, Defendants provided a supplemental response to Rog 3. Plaintiff avers that Defendants’ supplemental response to Rog 3 does not provide sufficient information and that Defendants’ assertion that the burden of ascertaining such information is substantially the same for Plaintiff as it is for Defendants is wrong. It asks that I order Defendants to further supplement. Defendants respond that I should deny Plaintiff's request for failure to meet and confer on this issue. In addition, Defendants assert that Rog 3 is unduly burdensome and not proportional to the needs of the case. Also, Defendants state that they do not track the distribution or sales of their customers’ products. Finally, Defendants aver that Plaintiff has not identified the relevance of some of these intermediaries. I agree with Defendants that Plaintiff has not shown the relevance of some of these intermediaries. Plaintiff has, however, shown that Defendants are aware of at least some of their customers’ U.S sales. See 3AC, ¶¶ 376-412. But, because I have ordered Defendants to produce documents as outlined above in Section III.A. that I believe may provide additional information, supplementation of Rog 3 is premature. If, after reviewing Defendants’ production, Plaintiff believes that Defendants may have further information responsive to Rog 3, it should meet and confer with Defendants. If Plaintiff is still dissatisfied with Defendants’ response, it then should bring the issue to my attention. Therefore, I DENY WITHOUT PREJUDICE Plaintiff's motion that Defendants supplement Rog 2. 3. Plaintiff's Interrogatory No. 5 (“Rog 5”) Rog 5 requests: “For each product identified in Interrogatory No. 1, describe where and over what time period it was manufactured, used, sold, offered for sale, or imported into the United States.” On March 24, 2022, Defendants provided a supplemental response to Rog 5. Plaintiff avers that Defendants’ supplemental response to Rog 5 does not provide sufficient information and that Defendants’ assertion that the burden of ascertaining such information is substantially the same for Plaintiff as it is for Defendants is wrong. It asks that I order Defendants to further supplement. Defendants respond that I should deny Plaintiff's request for failure to meet and confer on this issue. They also state that certain spreadsheets of information that was gathered from several of defendants’ databases of sales data and provided with the Rog 5 supplemental response identifies the date of each transaction as it is maintained in the ordinary course of business. Defendants, however, do admit that at least one of the spreadsheet of information is missing requested data. During the June 16 hearing regarding this dispute, I noted that another of the spreadsheets was missing cost information. That information must be provided. The spreadsheet that contains very little information due to a clerical error must be corrected. In light of the Court's June 23, 2022 Sealed Order (See D.I. 297), these spreadsheets must be updated with information for all of the more that 1000 W-Fi Products Defendants admitted fall within Plaintiff's description of accused Wi-Fi Products. D.I. 248 at 3. Additionally, the spreadsheets must be updated with information for all sales of the Accused Products world-wide because, as noted above in Section III.A, Plaintiff has established the relevance of that information. Because I have ordered not only the supplementation of the spreadsheets but also that Defendants must produce documents as outlined above that I believe should provide additional information, further supplementation of Rog 5 beyond that is premature. If, after reviewing Defendants’ production, Plaintiff believes that Defendants may have more information responsive to Rog 5, it should meet and confer with Defendants. If Plaintiff is still dissatisfied with Defendants’ response, it then should bring the issue to my attention. *7 Therefore, I GRANT IN PART Plaintiff's motion that Defendants supplement Rog 5. 4. Plaintiff's Interrogatory Nos. 9 and 11 (“Rog 9” and “Rog 11”) Rog 9 requests: “For each LDPC Product separately, describe on a monthly basis the financial performance since December 12, 2012 through present, the answer should include: (a) the total number of units sold; (b) the price (in U.S. dollars); (c) the revenues associated with the units sold (in U.S. dollars); (d) the gross profits associated with the units sold (in U.S. dollars); (d) the net profits associated with the units sold (in U.S. dollars); and (e) all costs relating to the units sold (in U.S. dollars), and identify Documents and other evidence establishing such prices, profits, costs, and profits.” Rog 11 requests: “For each LDPC Product separately, identify by name and address all customers or prospective customers to whom You have presented, supplied, sampled, demonstrated, offered to sell, or sold each such product from December 12, 2012 to the present. On March 24, 2022, Defendants provided supplemental responses to Rog 9 and Rog 11. Plaintiff avers that Defendants’ supplemental responses to Rog 9 and Rog 11 do not provide sufficient information and that Defendants’ assertion that the burden of ascertaining such information is substantially the same for Plaintiff as it is for Defendants is wrong. It asks that I order Defendants to further supplement. Defendants respond that I should deny Plaintiff's request because their transactional data supplied in certain spreadsheets provides responsive information regarding costs and profits for each of the Accused Products. As noted above in Section III. B. 3, the information provided in the spreadsheets must be updated to include missing information and supplemented to add information for all sales of the Accused Products world-wide, as that term is now defined. Because I have ordered not only the supplementation of the spreadsheets but also that Defendants must produce documents as outlined above in Section III.A. that I believe should provide additional information, further supplementation of Rog 9 and Rog 11 beyond that is premature. If, after reviewing Defendants’ production, Plaintiff believes that Defendants may have more information responsive to Rog 9 and Rog 11, it should meet and confer with Defendants. If Plaintiff is still dissatisfied with Defendants’ response, it then should bring the issue to my attention. Therefore, I GRANT IN PART Plaintiff's motion that Defendants supplement Rog 9 and Rog 11. IV. CONCLUSION As detailed above, Plaintiff's Motion for Discovery Conference and Relief (D.I. 268) is GRANTED IN PART AND DENIED IN PART. If I have not discussed certain assertions made or case law cited by the parties that does not mean that I did not consider them before making my Rulings and Recommendations. Out of an abundance of caution, I will file the Rulings and Recommendations under seal. The parties are ordered to confer regarding any proposed redactions. The proposed redactions and correspondence explaining why the redactions are necessary must be sent to me by 1 p.m. on June 29, 2022. *8 The parties are referred to D.I. 231 regarding procedures for any appeal of the Rulings and Recommendations. Such are the Rulings and Recommendations of the Special Master. Dated June 27, 2022 Footnotes [1] The four documents that Plaintiff cited in its 3AC are attached to Defendants’ Letter Brief as Exhibits 11-14.