Hyundai Motor Company et al. v. Hyundai Technology Group, Inc. et al Case No. SA CV 23-01709-CBM (DFMx) United States District Court, C.D. California Filed January 30, 2024 Counsel David R. Eberhart, Amy K. Liang, Andrew Miles Levad, Daniel H. Bookin, Martin Samuel Checov, Nathaniel I. Legum, O'Melveny and Myers LLP, San Francisco, CA, Jeffrey J. Fowler, Jillian R. Weinstein, Sean T. Andrews, O'Melveny & Myers LLP, Los Angeles, CA, Kaitlyn Amanda Noelani, Gosewehr, O'Melveny and Myers LLP, Menlo Park, CA, Kristin Alvarado, Pro Hac Vice, Patrick V. Plassio, Pro Hac Vice, O'Melveny and Myers LLP, Dallas, TX, Luann Loraine Simmons, Timothy D. Byron, Byron Raphael LLP, San Francisco, CA, for Hyundai Motor Company et al. Ronald P. Oines, Alejandro S. Angulo, Marcel Budiono, Meredith L. Williams, Sarah Van Buiten, Talya Goldfinger, Rutan and Tucker LLP, Irvine, CA, for Hyundai Technology Group, Inc. et al. McCormick, Douglas F., United States Magistrate Judge Proceedings: (IN CHAMBERS) Order re: Discovery Disputes *1 During December 2023, I held two telephonic discovery conferences in this matter. See Dkts. 61, 62. During the second conference, I asked counsel to agree to a supplemental briefing schedule to address the parties' continued dispute about the production of certain documents. See Dkt. 62. Those supplemental briefs have now been filed, see Dkts. 64-67, and counsel discussed their arguments with me during a third telephonic discovery conference on January 24, 2024, see Dkt. 69. This is a trademark case. The parties have a dispute about the use of the HYUNDAI mark in connection with computers and electronic goods in the United States. Plaintiffs—Hyundai Motor Company and its parent company Hyundai Motor America, Inc.—sell HYUNDAI motor vehicles in the United States. Plaintiffs have brought this action against Defendants Hyundai Technology Group, Inc., General Procurement, Inc., and Hyundai Technology, Inc., to try to stop Defendants from using the HYUNDAI mark. Plaintiffs have six causes of action: (1) federal trademark dilution; (2) Lanham Act false designation of origin; (3) common law unfair competition; (4) unfair competition under California law; (5) cancellation of Defendants' trademark registration based on invalid assignment and tarnishment; and (6) a declaratory judgment claim that the assignment of the registration was invalid and should be cancelled. Defendants have asserted 13 affirmative defenses, including laches. The parties' dispute revolves around the scope of Plaintiffs' production of documents responsive to three RFPs. Those RFPs are: • No. 23: “All DOCUMENTS, including COMMUNICATIONS, mentioning or concerning DEFENDANTS.” • No. 31: “All DOCUMENTS, including COMMUNICATIONS, concerning YOUR knowledge of DEFENDANTS, including DOCUMENTS sufficient to show when and how YOU first became aware of each of DEFENDANTS.” • No. 34: “All DOCUMENTS, including COMMUNICATIONS, concerning the right to use PLAINTIFFS' MARKS in connection with computer products.” Plaintiffs have agreed to produce documents responsive to RFPs 23, 31, and 34, but want to limit their production to documents regarding activity and rights in the United States. For example, for RFP 31, Plaintiffs would agree to produce documents showing when and how Plaintiff became aware of each Defendant in the United States and Defendants' infringement in the United States. Plaintiffs argue that such limitations are warranted because trademark rights are territorial, rendering matters outside the United States irrelevant. Plaintiffs also argue that producing documents regarding foreign activity would be burdensome, pointing to the fact that Plaintiffs have filed legal actions and oppositions against Defendants in many foreign countries. Defendants argue that Plaintiffs' limitations are “arbitrary” and “unilateral,” and threaten to cut off Defendants' ability to obtain information about (1) what Plaintiffs knew about Defendants' conduct, information that Defendants contend is relevant to Defendants' laches defense, and (2) Defendants' assignment agreement, which Defendants contend is relevant to Plaintiff's causes of action about the validity of that agreement. *2 It's helpful to start with the basics about relevant discovery. Rule 26 provides that 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.” Fed. R. Civ. P. 26(b)(1). But relevant information “need not be admissible in evidence to be discoverable.” Id. Discovery may be limited, if the court determines that the burden or expense of the proposed discovery outweighs the likely benefit. See Fed. R. Civ. P. 26(b)(2)(C). Many cases have stated the proposition that courts have “broad discretion” to control discovery, and that discretion extends to determining what is relevant for discovery purposes. See, e.g., Manufacturing Automation and Software Systems, Inc. v. Hughes, No. 16-08962, 2017 WL 5641120, at *3 (C.D. Cal. Sept. 21, 2017). Defendants argue that foreign discovery could lead to the discovery of admissible evidence relevant to their laches defense. See Dkt. 65 at 9 (“Foreign discovery here could support a laches defense”), Dkt. 67 at 2 (“Plaintiffs' knowledge of Defendants' foreign activities could lead to the discovery of admissible evidence relevant to Defendants' laches defense”). I have two problems with this argument. First, it is framed using language from the pre-2015 version of Rule 26, which provided that even inadmissible evidence was discoverable if it “appears reasonably calculated to lead to the discovery of admissible evidence.” But as the court noted in In re Bard IVC Filters Products Liability Litig., 317 F.R.D. 562, 563-64 (D. Ariz. 2016), the 2015 amendments jettisoned that language and made clear that the test is whether evidence is “relevant to any party's claim or defense,” not whether it is “reasonably calculated to lead to admissible evidence.” Second, I am not persuaded that Defendants have adequately addressed Plaintiffs' authority that stands for the proposition that foreign activity cannot create an equitable defense under U.S. trademark law. It's clear that trademark rights are territorial, such that what happens around the world isn't relevant to U.S. trademark rights. See Dkt. 65 at 2 (conceding that “discovery in a trademark case is generally limited by territoriality”); see also Grupo–Gigante SA De CV v. Dallo & Co., Inc., 391 F.3d 1088, 1093 (9th Cir. 2004) (“Priority of trademark rights in the United States depends solely upon priority of use in the United States, not on priority of use anywhere in the world. Earlier use in another country usually just does not count.”) (citations omitted). Courts have extended that principle to find that evidence of foreign activity is not relevant to a defense of laches. See Jarabes Veracruzanos, Inc. v. Productora de Alimentos Mexicanos, No. 14-466, 2016 WL 7486368, at *3 (W.D. Tx. Apr. 8, 2016) (“If the trademark territoriality principle precludes foreign use as ineffectual to create trademark rights in the United States, it hardly seems logical that this same evidence of foreign use could be effectual in defending against an action to enforce a trademark.”); see also Delta Air Lines, Inc. v. Marriott International, Inc., No. 20-1125, 2021 WL 12121916, at *12 (N.D. Ga. June 25, 2021). Moreover, Plaintiffs are clear that they will produce documents related to U.S. trademark rights, even if they also mention non-U.S. activity or entities, as well as documents showing Plaintiffs' knowledge of Defendants' U.S. activities. See Dkt. 66 at 2 (“Plaintiffs have committed to produce documents related to U.S. trademark rights”), 3 (representing that Plaintiffs “are not withholding documents that discuss U.S. activity and also mention non-U.S. activity [or] merely because they mention or were exchanged with foreign entities”), 9 (stating that “Plaintiffs do not object to producing documents showing Plaintiffs' knowledge of Defendants' U.S. activities”). Plaintiffs are also clear that they will produce documents and communications about the disputed registration assignment. See id. at 10 (stating that Plaintiffs will produce “documents and communications” related to “disputed assignment agreement”). *3 Finally, Plaintiffs' burden argument is compelling. Plaintiffs have collected 6,000 emails and attachments that mention Defendants. See Dkt. 66-1 at 2. Of those, “the vast majority” involve “discussions about legal actions filed against Defendants in non-U.S. countries.” Id. Most of those discussions are, according to Plaintiffs, potentially privileged. See id. Plaintiffs suggest that reviewing those documents for privilege and creating a privilege log would take several hundred hours. See id. at 3. Even if this estimate is overstated, the burden would be substantial. I find that this burden outweighs the likely benefit of producing these materials. * * * * * A separate issue arose during last Tuesday's discovery conference. After some discussion, the parties were unable to resolve a dispute about Plaintiffs' RFP No. 92, which seeks “[d]ocuments sufficient to show the number of, type of, price of, revenues from, costs of, and profits from goods sold by Defendants using the ‘Hy’ brand.” Plaintiffs argue that these financials are relevant to whether an injunction should issue— more specifically, whether the balance of hardships would favor an injunction. Plaintiffs assert that evidence that Defendants had already pivoted to a non-infringing brand would tend to weaken Defendants' arguments against injunctive relief. At the hearing, I tentatively stated that I thought Plaintiffs' argument was persuasive as to number and type of goods sold by Defendants using the alternative HY brand. I agreed with Plaintiffs that such evidence may be persuasive to a district court conducting a balance of hardships analysis. See, e.g., San Diego Comic Convention v. Dan Farr Prods., 336 F. Supp. 3d 1191, 1198 (S.D. Cal. 2018) (noting that balance of hardships tipped in plaintiff's favor because, among other things, defendant had “started the process of changing their event name”). But I was less persuaded that detailed financials about those sales were necessary. Having considered further the cases cited by the parties in their pre-conference letters and their meet-and-confer correspondence, I adopt my tentative view as an order of the court. Defendants are ORDERED to produce documents sufficient to show the number of and type of goods sold using the HY brand. Such documents may be produced with the appropriate designation under the Court's protective order (Dkt. 54).