Summary:Defendant Feit Electric Co. filed a motion to compel production of certain items located in South Korea related to LED patents, which was denied by Magistrate Judge Kewalramani. Defendant then filed a motion for review, which was also denied by the Court. The Court upheld Judge Kewalramani's order, stating that Defendant has a right to inspect the items in South Korea and take notes and photographs, but may need to bear additional expenses if there is a meaningful difference in the inspection process.
Court:United States District Court, C.D. California
Date decided:
Judge:Birotte Jr., Andre
SEOUL SEMICONDUCTOR CO., LTD. et al. v. FEIT ELECTRIC CO., INC Case No.: CV 22-05097-AB (SHKx) United States District Court, C.D. California Filed March 06, 2024 Counsel Ashwin J. Ram, Steptoe and Johnson LLP, Los Angeles, CA, Bryon T. Wasserman, David Radulescu, Pro Hac Vice, Etai Lahav, Pro Hac Vice, Jonathan Auerbach, Pro Hac Vice, Radulescu LLP, New York, NY, Guy Ruttenberg, Ruttenberg IP Law APC, Los Angeles, CA, Jennifer L Jonak, Jonak Law Group, P.C., Eugene, OR, Kevin S. Kudlac, Pro Hac Vice, Radulescu LLP, Austin, TX, Michael Bradley Eisenberg, Pro Hac Vice, Stevens and Lee, New York, NY, for Plaintiff Seoul Semiconductor Co., Ltd. Bryon T. Wasserman, David Radulescu, Pro Hac Vice, Etai Lahav, Pro Hac Vice, Radulescu LLP, New York, NY, Guy Ruttenberg, Ruttenberg IP Law APC, Los Angeles, CA, Jennifer L Jonak, Jonak Law Group, P.C., Eugene, OR, Jonathan Auerbach, Pro Hac Vice, New York, NY, Kevin S. Kudlac, Pro Hac Vice, Radulescu LLP, Austin, TX, Michael Bradley Eisenberg, Pro Hac Vice, Stevens and Lee, New York, NY, Ashwin J. Ram, Steptoe and Johnson LLP, Los Angeles, CA, for Plaintiff Seoul Viosys Co., Ltd. Theresa L. Starck, Pro Hac vice, Kalpesh K. Shah, Pro Hac Vice, Simeon G. Papacostas, Pro Hac Vice, Benesch Friedlander Coplan and Aronoff LLP, Chicago, IL, Ziyong Li, Gregory Carl Proctor, Pro Hac Vice, Benesch Friedlander Coplan and Aronoff, San Francisco, CA, Douglas Quinton Hahn, Salil Bali, Stradling Yocca Carlson and Rauth LLP, Newport Beach, CA, for Defendant. Birotte Jr., Andre, United States District Judge Proceedings: [In Chambers] ORDER DENYING DEFENDANT'S MOTION FOR REVIEW OF ORDER REGARDING MOTION TO COMPEL PRODUCTION OF TANGIBLE ITEMS FOR REVIEW *1 Before the Court is Defendant Feit Electric Co.'s (“Defendant” or “Feit”) motion for review of Magistrate Judge Kewalramani's order denying Defendant's motion to compel production of certain items presently located in South Korea. (“Motion,” Dkt. No. 146.) Plaintiffs Seoul Semiconductor Co., Ltd. and Seoul Viosys Co., Ltd. (“Plaintiffs” or “Seoul”) filed an opposition (“Opp'n,” Dkt. No. 150.), and Defendant filed a reply. (“Reply,” Dkt. No. 152.) For the following reasons, the Court DENIES Defendant's Motion. I. BACKGROUND Plaintiffs own United States Patent Nos. 9,716,210 (“the '210 Patent”), 7,667,225 (“the '225 Patent”), 9,799,800 (“the '800 Patent”), 9,929,314 (“the '314 Patent”), 9,577,157 (“the '157 Patent”), 10,217,912 (“the '912 Patent”), 10,916,684 (“the '684 Patent”), 7,906,789 (“the '789 Patent”), 10,134,967 (“the '967 Patent”), 10,510,933 (“the '933 Patent”), 9,627,435 (“the '435 Patent”), and 8,716,946 (“the '946 Patent”). (“Compl.,” Dkt. No. 1 ¶¶ 10–21.) Broadly speaking, these patents pertain to LED products. On September 8, 2023, Defendant requested that Plaintiffs produce, and permit Defendant's attorneys and retained experts to inspect, certain tangible things pursuant to Fed. R. Civ. P. 34. (Dkt. No. 145 at 2.) The relevant discovery request was directed to the following items: (i) “the accused products referenced in Plaintiffs' Complaint”; (ii) “the accused products used for or depicted in Plaintiffs' April 20, 2023 Infringement Contentions”; (iii) “the accused products used for or depicted in Plaintiffs' August 8, 2023 Supplemental Infringement Contentions”; and (iv) “any Feit Electric product and parts thereof examined, tested, analyzed, photographed, imaged, measure[d], disassembled, or otherwise reviewed in any way by Plaintiffs and/or their counsel in connection with the captioned action.” (Id.) Defendant anticipated that, during the inspection, it might “observe in-person, physically touch, manipulate, operate, move, measure, photograph, videotape, diagram, document, measure, and test, the tangible items” listed above. (Id.) Defendant stated it would not engage in “destructive testing absent an agreement of all parties.” (Id.) On October 9, 2023, Plaintiffs served certain responses and objections to Defendant's request. (Id. at 3.) The Motion pertains to the following objection: “Plaintiffs object to the Inspection Notice to the extent it purports to require Plaintiffs to produce the requested things at a location other than where they are kept in the ordinary course of business or at a nearby location that is not unduly burdensome on Plaintiffs. To the extent Plaintiffs produce things for inspection pursuant to the Inspection Notice, they will be produced in or around Seoul, South Korea.” (Id.) Plaintiffs' response also included the following statement: “Plaintiffs will produce for inspection those products (and portions thereof) identified in Plaintiffs['] Complaint, Plaintiffs' April 20, 2023 Infringement Contentions, or Plaintiffs' August 8, 2023 Supplemental Infringement Contentions that are still in existence and can be produced for inspection without undue burden or expense, such products (and portions thereof) will be produced at a location in or around Seoul, South Korea at a mutually convenient time pursuant to a protocol agreed to in advance by the parties.” (Id. at 4.) *2 Magistrate Judge Kewalramani held that “Plaintiffs cannot dispute that Defendant has a right to inspect the accused products that are maintained in their care, custody, or control, nor do Plaintiffs appear to be forwarding such an argument.” (Id. at 7.) With respect to the location of the inspection, “if there is any meaningful difference between what would have been allowed if an inspection of the items were in the United States, but is not allowed in South Korea because it is contrary to South Korean legal standards, Plaintiffs may be required to bear any additional expenses that may arise during the course of the inspection.” (Id. at 7–8.) Further, “though the time and expense necessary to inspect the items are not negligible, Defendant has not shown that it would be unduly burdensome for Defendant to inspect the items in South Korea, be able to take any notes and photographs of them, and then to determine next steps.” (Id. at 9.) II. LEGAL STANDARDS “When a pretrial matter not dispositive of a party's claim or defense is referred to a magistrate judge to hear and decide ... [t]he district judge in the case must consider timely objections and modify or set aside any part of the order that is clearly erroneous or is contrary to law.” Fed. R. Civ. P. 72(a). “The clearly erroneous standard, which applies to a magistrate judge's findings of fact, is ‘significantly deferential, requiring a definite and firm conviction that a mistake has been committed.’ ” Green v. Baca, 219 F.R.D. 485, 488-89 (C.D. Cal. 2003) (quoting Concrete Pipe & Prods. v. Constr. Laborers Pension Trust, 508 U.S. 602, 623 (1993)). The contrary to law standard “permits independent [de novo] review of purely legal determinations by the magistrate judge.” Green, 219 F.R.D. at 489 (quoting F.D.I.C. v. Fidelity & Deposit Co. of Maryland, 196 F.R.D. 375, 378 (S.D. Cal. 2000)). “A party may not assign as error a defect in the order not timely objected to.” Id. “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.” Fed. R. Civ. P. 26(b)(1). “A party may serve on any other party a request within the scope of Rule 26(b): (1) to produce and permit the requesting party or its representative to inspect, copy, test, or sample the following items in the responding party's possession, custody, or control: ... (B) any designated tangible things ....” Fed. R. Civ. P. 34(a)(1)(B). The request “must specify a reasonable time, place, and manner for the inspection and for performing the related acts ....” Fed. R. Civ. P. 34(b)(1)(B). The Federal Rules of Civil Procedure “should be construed, administered, and employed by the court and the parties to secure the just, speedy, and inexpensive determination of every action and proceeding.” Fed. R. Civ. P. 1. III. DISCUSSION Defendant argues that Magistrate Judge Kewalramani erred in four respects. Each is addressed in turn. First, Defendant contends that the Judge Kewalramani applied the standard for the production of documents rather than the standard for the inspection of tangible items. Defendant relies on the following statements from Judge Kewalramani's order: Based on the reasons forwarded by Defendant for the review of the accused products, inspecting and potentially cataloguing the accused products in Plaintiffs' possession, the most analogous situation appears [to be] the production of non-electronically maintained documents. Consequently, as noted previously, the common practice appears to be to make [them] available where they are maintained. (Dkt. No. 145 at 9.) Defendant argues that this language applied the requirement that “[a] party must produce documents as they are kept in the usual course of business” from Fed. R. Civ. P. 34(b)(2)(E). Defendant concludes that this was error because the “usual course of business” standard only applies to documents and electronically stored information and only affects the matter in which the documents are presented, not the location of the inspection. *3 Judge Kewalramani's order was not erroneous because it did not apply the “usual course of business” standard. The phrase “usual course of business” appears nowhere in the order. (See Dkt. No. 145.) The phrase “ordinary course of business” appears only once, when Judge Kewalramani quoted Plaintiffs' objections. (Id. at 3.)[1] The section discussing the relevant legal standards cited the appropriate portion of Fed. R. Civ. P. 34. (Id. at 7.) And the language highlighted by Defendant does not have the significance Defendant suggests. First, there is a distinction between the location where an item is actually maintained and the location where the item would be located in the ordinary course of business. Judge Kewalramani's order only concerns the former.[2] Second, Judge Kewalramani never held that the location where an item is maintained is dispositive of where the inspection must occur. Indeed, the order only states that this is the location of inspection in “common practice.” (Id. at 9.) As Judge Kewalramani noted, the relevant question is whether the inspection location is “reasonable.” Fed. R. Civ. P. 34(b)(1)(B). When one party wishes to inspect an item, the present location of that item is relevant to understanding whether a proposed inspection location is reasonable: the distance the responding party would have to transport the item is relevant to the burden on that party. Likewise, the customary location for the inspection of analogous items is relevant to the reasonableness of the propounding party's expectation that the responding party transport the item to some different location. For these reasons, Judge Kewalramani never imported the “usual course of business” standard from Fed. R. Civ. P. 34(b)(2)(E)(i) into Fed. R. Civ. P. 34(b)(1)(B). Second, Defendant contends that Judge Kewalramani committed clear error by finding that the relevant items are kept in South Korea as part of the ordinary course of business. For the reasons already stated, Judge Kewalramani made no such finding. Even if such a finding had been made, Defendant's reasoning is unpersuasive. Defendant's position is that “the ‘course of business’ to which [Rule 34] refers concerns a party's substantive business operations.” Google, Inc. v. Am. Blind & Wallpaper Factory, Inc., No. 03-CV-5340 JF (RS), 2006 WL 5349265, at *4 (N.D. Cal. Feb. 8, 2006). Although the products were purchased from Defendant in the United States, Defendant has not identified any substantive business operations of Plaintiffs in the United States.[3] More importantly, Defendant has not linked any such operations to the business function at issue, which is testing LED products. Nothing in the record indicates that Judge Kewalramani would have clearly erred if there had been a finding that the relevant items would have been kept in South Korea as part of the ordinary course of business, even if they had not been purchased for purposes of litigation. Defendant also contends that the patent venue statute supports its position. Specifically, Defendant argues that, if Plaintiffs can only file suit in a venue where Defendant is incorporated or has a regular and established place of business, Plaintiffs should not be able to keep evidence in a foreign country during discovery. This argument is meritless. It is possible, and even common, for litigation to involve evidence located in a place where the action could not have been brought. Defendant cites no authority that the patent venue statute controls the jurisdictions where discovery may occur, and nothing in the text of that statute has any connection to discovery. See 28 U.S.C. § 1400(b). For the same reason, Defendant is also incorrect that Judge Kewalramani's order would compel it to litigate in Korea. This action will remain pending here; Defendant need only travel to Korea to inspect evidence stored there. *4 Third, Defendant contends that Judge Kewalramani made a series of additional factual errors. For example, Defendant contends that it was clear error to conclude that South Korea is a reasonable place for inspection if Plaintiffs refuse to commit not to ship the items to the United States for trial. (See Dkt. No. 146-1 ¶ 3.) Defendant also contends that Plaintiffs will not agree to permit Defendant to inspect the items if brought to the United States after the close of fact discovery. (See id.) Standing alone, this issue does not constitute clear error. No one knows whether there will be a trial in this matter. At this point, no one knows what accused products will still be in the case by the time of any trial. The parties were recently ordered to narrow the case, and the parties may also agree to narrow the case further to certain representative products before trial. Additionally, the Court's resolution of the parties' disputes may narrow the case. Furthermore, none of the jurors will be experts in LED manufacturing and they will not have the equipment necessary to inspect LED components. To the extent there are disputes about the properties of the accused products, those would likely be resolved by expert testimony about the accused products, not by introducing the accused products into evidence. Although the items might have some use as demonstratives, no party has proffered a reason why images of the items would not be sufficient. In any event, the Court is highly unlikely to permit the introduction of more than a small subset of the hundreds of items presently located in South Korea. See, e.g., Fed. R. Evid. 403 (permitting the Court to exclude cumulative evidence). For all these reasons, the odds are remote that Plaintiffs will eventually ship the items identified by Defendant to the United States. Defendant argues that, because Plaintiffs have been ordered to reduce the number of accused products, the burden of shipping the items to the United States will be proportionally reduced. However, the fourth part of Defendant's request for inspection includes all of Defendant's products examined by Plaintiffs, not just those cited in Plaintiffs' infringement contentions. (Dkt. No. 145 at 2.) Even if some of the accused products were dropped from the case, that would not limit the scope of Defendant's request. In addition, even if Defendant later narrowed its request to only the accused products, the amount of time Defendant's expert would need to inspect the items would also be reduced. Thus, Defendant's argument does not warrant a finding that the burden of performing an inspection in Korea makes the United States a reasonable place for the inspection. Finally, Defendant's argument would not mitigate Plaintiffs' concerns about the loss of, or damage to, the items during shipping. If, for any reason, any of the items identified by Defendant are brought to the United States before the close of fact discovery, the Court expects that Plaintiffs will permit their inspection in the United States. If any of the items are brought to the United States after that point, Plaintiffs would also be ordered to permit an inspection in the United States, so long as Defendant also showed good cause to amend the scheduling order. Defendant argues that Judge Kewalramani underestimated the burden of traveling to South Korea by failing to recognize that Defendant will have to send several experts. Defendant argues that it will have to send several technical experts to South Korea because the Plaintiffs have asserted twelve unrelated patents. Defendant's argument is unpersuasive. Although there are some differences in the patents, they are all related to LED optics. Because the patents are not unrelated, one or two experts would normally suffice. And because Defendant does not identify how many experts it needs to inspect the items or the fields implicated by the requested inspection, Defendant has not shown any clear error in Judge Kewalramani's order. Defendant also argues that it intends to send its in-house counsel to inspect the accused products. However, Defendant has not shown that this person's presence is necessary, so to the extent this increases the burden on Defendant associated with inspecting the items, that is prejudice of Defendant's own making. Defendant also argues that Judge Kewalramani underestimated the burden of traveling to South Korea by failing to recognize that Defendant will have to make multiple trips. Defendant speculates that issues might arise during the first inspection that necessitate a second inspection. But Defendant does not identify any specific issue that might arise. This is not sufficient to support a finding of clear error. Defendant knows what the products are, what their characteristics are, and how they are made. After all, they are Defendant's own products. The only purpose for the inspection identified by Defendant is to “confirm the[ ] [accused products] are in fact [Defendant's] products and assess Plaintiffs' assertions.” (Motion at 6.) Defendant has offered the Court no specific reason to believe that it needs lengthy or repeated inspections to recognize whether the products are its own and to evaluate Plaintiffs' contentions. *5 Defendant also argues that, if disputes arise on the eve of testing or inspections, it will be left without recourse after it has traveled to South Korea. At this point, it is speculative whether any disputes will arise. But in any event, Defendant would not be without recourse. Judge Kewalramani anticipated that the parties would work collaboratively to make the inspection as efficient as possible, and this Court shares the same expectation. The parties should meet and confer regarding the details of the inspection to resolve potential disputes in advance. If there are disputes the parties cannot resolve, they can present them to Judge Kewalramani through the normal process before Defendant's experts travel to South Korea. If a dispute arises after Defendant's experts are in South Korea and the parties need an expedited resolution, the parties can proceed by ex parte application. If Plaintiffs were to deny Defendant the opportunity to test the accused products without substantial justification, Defendant's costs and fees could be shifted to Plaintiffs. See Fed. R. Civ. P. 37(a)(5)(A). For the first time in its Reply, Defendant objects to Plaintiffs' methodology for estimating the cost of shipping. (See Dkt. No. 152 at 7.) Defendant waived this potential ground for an appeal by failing to raise it in the Motion. (See generally Dkt. No. 146 at 12-14.) Even if this alleged error were not waived and Defendant's shipping cost estimates were adopted, Defendant's contentions about the burden of performing the inspection in Korea are unpersuasive. Judge Kewalramani did not clearly err in ruling that the inspection should take place in Korea. Fourth, Defendant argues that public policy strongly weighs against requiring the inspection to take place in South Korea. Defendant contends Judge Kewalramani's order will encourage future patentees to design testing schemes that hide evidence overseas to inflict additional litigation costs on future defendants. Defendant also contends that, although Plaintiffs did not expressly admit to moving the items to South Korea for an improper purpose, Plaintiffs only purchased the items for purposes of litigation and have refused to commit not to bring them back to the United States for trial. Defendant's arguments are unpersuasive. As Judge Kewalramani noted, “every case is unique based on the resources of the parties and the scope of litigation, such that any ruling in this case is not automatically determinative of other cases.” (Dkt. No. 145 at 9.) Defendant's proposed inspection presents several unique circumstances. First, Defendant is seeking to inspect its own products, which it is already familiar with, to determine whether they are authentic and have the characteristics identified by Plaintiffs. This reduces both the difficulty and importance of the inspection. Second, because Defendant is seeking to inspect allegedly representative products tested by Plaintiffs, and not unique items with greater intrinsic significance, the difficulty and importance of the inspection are again reduced. Third, in other cases, the resources of the parties and the relevance of the items to the litigation could alter the balance of factors relevant to the location of the inspection. Fourth, Judge Kewalramani correctly held that “there is no indication that the accused products were tested and maintained in South Korea in order to drive up the expenses associated with the litigation or for any other improper reason.” (Id.) Although Defendant is correct that patentees are unlikely to admit to moving evidence to drive up litigation costs, Defendant has not presented any circumstantial evidence that Plaintiffs tested the accused products in South Korea for an improper reason. By way of example rather than limitation, there is no evidence suggesting Plaintiffs had facilities sufficient to test the accused products in the United States; there is no evidence suggesting Plaintiffs had previously worked with independent laboratories in the United States to test products similar to test the accused products; there is no evidence rebutting Defendant's contention that the accused products could only have been tested with rare, specialized equipment; there is no evidence that Plaintiffs' facilities and operations in the United States are so substantial as to warrant the inference that Plaintiffs moved the accused products to South Korea to hide them from Defendant; there is no evidence suggesting that the burden of inspecting the accused products is great enough to warrant the inference that Plaintiffs moved the accused products to South Korea to deter Defendant from inspecting them; there was no evidence that Plaintiffs tested the products in the United States and then shipped them to South Korea for no purpose; and there was no evidence that Plaintiffs stored the accused products in the United States for a substantial period and transported them to South Korea shortly before filing suit. In some cases, if a plaintiff moves evidence abroad before filing a case but back to the United States for trial, that fact would favor a finding of bad faith. But for all the reasons stated in this Order, Judge Kewalramani did not clearly err in finding that Plaintiffs' refusal to commit not to use the items at trial did not indicate that Plaintiffs' decision to test the items in South Korea was made to increase Defendant's litigation costs. *6 It would not be appropriate for a patentee to design a testing scheme for the purpose of increasing the defendant's litigation costs. Here, however, there is insufficient evidence that happened. That determination does not control the resolution of any other case. In its reply brief, Defendant also argues that, even if the patentee did not act in bad faith, requiring the defendant to inspect items abroad could impose unfair hardship on the defendant. That may be true, at least in some cases. But Defendant's argument calls for an individualized assessment of the hardships to each party of requiring the inspection to occur in a given location. For the reasons stated above, Judge Kewalramani did not err in determining that the balance of hardships favored Plaintiffs' position. IV. CONCLUSION For the foregoing reasons, Defendant's Motion is DENIED. The Court expects that, if Plaintiffs maintain their position that the accused products will only be made available in South Korea, that Defendant will have full access as they would if the accused products were made available for inspection in the United States and that every effort will be made by Plaintiffs to allow access to the items so that they can be reviewed in an efficient manner. IT IS SO ORDERED. Footnotes [1] Even Plaintiffs did not apply a strict “ordinary course of business” standard. They acknowledged that inspection could be proper either “where the[ ] [items] are kept in the ordinary course of business or at a nearby location that is not unduly burdensome on Plaintiffs.” (Dkt. No. 145 at 3.) [2] Even if Judge Kewalramani had considered the location where the items would be kept in the ordinary course of business, it would have been appropriate to do so here. Although the location where an item is maintained in the ordinary course of business is not dispositive of whether an inspection location is “reasonable,” it can be relevant. If a party responding to a request for inspection is forced to transport an item from the location where it would be maintained in the ordinary course of business, that places some burden on responding party, which can be significant in evaluating where the proposed inspection location is reasonable. [3] In passing, Defendant contends “Plaintiffs have offices dedicated to lighting technology within this [D]istrict.” (Motion at 14.) No evidence is proffered in support of this statement, which is conclusory attorney argument.