Facet Technologies, LLC v. LifeScan Inc Case No. 2:22-CV-01717-MCS (MAR) United States District Court, C.D. California Filed April 26, 2023 Rocconi, Margo A., United States Magistrate Judge Proceedings: MOTION TO COMPEL DISCOVERY (Dkts. 131 & 143) *1 On April 5, 2023, Plaintiff, Facet Technologies, LLC (“Facet”), filed a Motion seeking: (1) to strike Defendant, LifeScan Inc.'s (“LifeScan”) supplemental invalidity contentions; (2) extend the deadline to take depositions; (3) compel a list of LifeScan's twelve most likely testifying witnesses at trial; and (4) increase the depositions allowed from ten to twelve (“Facet's first Motion”). ECF Docket Nos. (“Dkts.”) 131; 131-2 at 5. In the same Motion, LifeScan moved to enforce a confidentiality provision in a prior arbitration agreement (“LifeScan's Motion”). Dkt. 131 at 26. On April 12, 2023, Facet filed a Motion seeking: (1) to compel LifeScan to produce an unredacted opinion letter from opinion counsel and waive trial counsel's privilege as to the subject matter of non-infringement; and (2) to compel LifeScan to produce documents and deposition testimony regarding products sold alongside and with the accused products (“Facet's second Motion”). Dkt. 143. On April 26, 2023, the Court held a hearing on these Motions. For the reasons set forth below, Facet's first Motion, Dkt. 131, is GRANTED in part and DENIED in part, and LifeScan's Motion is DENIED. Facet's second Motion is GRANTED in part and DENIED in part. I. SUMMARY On March 15, 2022, Plaintiff Facet filed a complaint alleging that Defendant LifeScan infringed upon its U.S. Patent No. 8,840,635 (“'635 Patent”). See Dkts. 1; 42; 93. Facet and LifeScan are both in the blood glucose monitoring business. Dkt. 93 at 1. The '635 Patent relates to lancing devices used to obtain blood samples for medical testing purposes. II. DISPUTED DISCOVERY A. FACET'S FIRST MOTION, DKT. 131 As noted above, “Facet moves for an Order (1) striking LifeScan's belated and prejudicial supplemental invalidity contentions, and (2) providing an opportunity for the parties to depose each other's trial witnesses.” Dkt. 131-2 at 5. LifeScan also moves to enforce a confidentiality provision in a prior arbitration agreement. Id. at 26. 1. Facet's Motion to Strike LifeScan's supplemental invalidity contentions In the Central District, discovery-related matters are automatically referred to magistrate judges. See United States District Court for the Central District of California, General Order 05-07. Discovery-related matters typically include motions brought pursuant to Fed. R. of Civ. P. 37; Facet's Motion to Strike does not obviously fall into that category. Furthermore, the central dispute centers around whether LifeScan's contentions were timely; the resolution of this question requires interpreting and potentially modifying deadlines set by the district judge. See Dkt. 131-2 at 9–19. Indeed, ruling on this matter would go beyond resolving a discovery dispute, and may affect the scope of the issues in this case going forward. The Court notes that, in this district, similar motions are consistently brought before district judges. See Allfasteners United States v. Acme Operations Pty, No. LA CV18-06929 JAK (RAOx), 2020 WL 4781645 (C.D. Cal. Apr. 27, 2020); MyMedicalRecords, Inc. v. Walgreen Co., No. 2:13-cv-00631-ODW(SHx), 2013 WL 6834639 (C.D. Cal. Dec. 23, 2013); Star Envirotech, Inc. v. Redline Detection, LLC, No. SACV 12-01861 JGB (DFMx), 2015 WL 4744394 (C.D. Cal. Jan. 29, 2015). Ultimately, absent an explicit referral from the district judge, the undersigned declines to rule on this issue at this time. As such, Facet's Motion to Strike Invalidity Contentions is DENIED without prejudice to filing it before the district court. 2. Facet's Motion for witness list and deposition modifications *2 Facet moves the Court to: (1) require LifeScan to produce a list of twelve witnesses from their initial disclosures that they are most likely to bring to trial; (2) increase Facet's deposition limit to twelve; and (3) allow depositions to be taken after the close of fact discovery. a. Witness list To comply with the Federal Rules of Civil Procedure Rule 26, LifeScan has identified thirty-two (32) individuals who might have relevant information on the case. Facet argues that all thirty-two (32) witnesses will not be able to testify at the three-to-four day trial, and that they have no way to know which of the thirty (32) witnesses will actually testify. Dkt. 131-2 at 20–22. As such, Facet asks the Court to order LifeScan to provide Facet with an unbinding list of its twelve (12) most likely witnesses to be used at trial so they can narrow the scope of their depositions. Facet cites no authority to justify this request, other than the general proposition that the Court has the authority to control its own docket. Id. at 21. However, Facet's primary motivation for this request does not appear to be to benefit the Court, but to help Facet more easily determine their trial strategy. There appears to be no reason that LifeScan would need to identify their witnesses for the Court at this time; in any case, LifeScan will eventually have to—and has agreed to—identify their trial witnesses when it becomes necessary for scheduling purposes. Ultimately, without any legal authority or compelling justification, it does not appear necessary for the Court to compel LifeScan to identify their trial witnesses at this time. See Saniefar v. Moore, No. 1:17-CV-00823-LJO-BAM, 2019 WL 3202924, at *4 (E.D. Cal. July 16, 2019) (rejecting defendant's motion to compel premature witness identification even where plaintiff identified over 600 witnesses on its Rule 26 Disclosures, recognizing that in complex cases it is not inconceivable that “the number of potential witnesses well-exceeds that of standard litigation.”). As such, Facet's request for LifeScan to prematurely narrow and provide Facet a witness list of its twelve (12) most likely witnesses to testify is DENIED. b. Deposition limit At the hearing on this Motion, the parties agreed to increase the deposition limit to twelve (12) for both parties. Accordingly, this component of Facet's Motion is GRANTED. c. Modification of the discovery deadline Facet asks to be allowed to continue to take depositions after the close of fact discovery, which is currently May 1, 2023. Dkt. 131-2 at 23. In effect, this request is a disguised motion to modify the discovery deadline. Federal Rule of Civil Procedure Rule 16 (“Rule 16”) governs scheduling orders. Pursuant to the Central District of California Local Civil Rule 16-14, “[a]ny application to modify an order entered pursuant to Rule 16 shall be made to the judicial officer who entered the order.” C.D. Cal. L.R. 16-14. Accordingly, a magistrate judge lacks authority to amend a district judge's Scheduling Order. See Watts v. Allstate Indemnity Co., No. 2:08-cv-01877 LKK KJN, 2012 WL 5289314 (E.D. Cal. Oct. 23, 2012) (finding that a magistrate judge does not have authority to amend a district judge's scheduling order); UMG Recordings, Inc. v. Disco Azteca Distribs., No. CIV.S-04-2611 FCD DAD, 2006 WL 2034689, at *3 (E.D. Cal. July 18, 2006) (“Of course, the magistrate judge is not empowered to modify the district judge's scheduling order.”). *3 Therefore, Facet's Motion is DENIED without prejudice to renewing its request to the district judge. 3. LifeScan's Motion to Enforce confidentiality order in past arbitration[1] LifeScan asks the Court to uphold a confidentiality agreement from a past arbitration. Dkt. 131-2 at 26–49. After reviewing the terms of the agreement, this Court finds Facet has satisfied the requirements set forth in the plain language of the agreement as to warrant disclosure of the files. The Court notes that the Parties are still bound to only provide relevant discovery material responsive to what is being requested. The Court also notes that any privacy concerns are mitigated by the Protective Order already in place in this action. Dkt. 118; see In re Heritage Bond Litigation, 2004 WL 1970058, *5 n.12 (C.D. Cal. July 23, 2004) (finding that privacy concerns can be adequately protected by a protective order). LifeScan's Motion to enforce the Confidentiality Provision by way of barring Facet from using the Arbitration Materials is DENIED. B. FACET'S SECOND MOTION, DKT. 143 Facet moves for an Order: (1) compelling LifeScan and non-party indemnitor Asahi Polyslider Company, Ltd. (“Asahi”) to produce discovery in light of LifeScan's reliance on an opinion of counsel letter; and (2) compelling LifeScan to produce documents and deposition testimony regarding products sold alongside and with the accused products. 1. Discovery related to opinion letter a. Parties' contentions Facet contends LifeScan has long had knowledge of Facet's intellectual property but is attempting to escape a finding of willful infringement by relying on an opinion of counsel that Asahi received from a partner at the same firm as LifeScan's trial counsel. Dkt. 143-2 at 7. The parties agree that LifeScan, which produced a redacted copy of that letter, and Asahi, which presumably shared that letter with LifeScan, have waived privilege with respect to the subject matter of the letter. Id. at 7–8. While the parties also agree that subject-matter waiver applies and extends past the filing date of the Complaint, LifeScan refuses to produce an unredacted copy of the letter and disputes whether that waiver extends from opinion counsel to trial counsel. Id. Facet moves to compel discovery regarding the waived subject matter of the letter, including communications with trial counsel and work product containing or discussing communications with trial counsel and deposition testimony regarding the same. Id. LifeScan contends they have not infringed, willfully or otherwise, the claims of the '635 Patent. Id. at 8. They allege they obtained an opinion of counsel in 2017, which stated that LifeScan's products do not infringe the Patent-in-Suit. Id. They contend their reliance on the opinion of counsel waives its attorney-client privilege with respect to communications with opinion counsel regarding the subject matter of the opinion but does not waive the privilege beyond the subject matter of the opinion or to communications with trial counsel as Facet now argues. Id. b. Law *4 “Once a party announces that it will rely on advice of counsel, for example, in response to an assertion of willful infringement, the attorney-client privilege is waived.” In re EchoStar Commc'ns Corp., 448 F.3d 1294, 1299 (Fed. Cir. 2006). “The widely applied standard for determining the scope of a waiver of attorney-client privilege is that the waiver applies to all other communications relating to the same subject matter.” Id. Waiver may also extend to attorney work product. “The overarching goal of waiver in such a case is to prevent a party from using the advice he received as both a sword, by waiving privilege to favorable advice, and a shield, by asserting privilege to unfavorable advice,” and thus “[t]o the extent the work-product immunity could have such an effect, it is waived.” Id. at 1303. Waiver may also extend to trial counsel. Although the Federal Circuit has noted that, “as a general proposition,” “asserting the advice of counsel defense and disclosing opinions of opinion counsel do not constitute waiver of the attorney-client privilege for communications with trial counsel,” it explicitly stated that it “do[es] not purport to set out an absolute rule” on the matter. In re Seagate Tech., LLC, 497 F.3d 1360, 1374 (Fed. Cir. 2007), abrogated on other grounds by Halo Elecs., Inc. v. Pulse Elecs., Inc., 579 U.S. 93 (2016). Instead, the Federal Circuit observed, “trial courts remain free to exercise their discretion in unique circumstances to extend waiver to trial counsel.” Id. at 1374–75. District courts in California have extended the waiver to trial counsel, where, like here, opinion counsel and trial counsel are at the same firm. See, e.g., Celerity, Inc. v. Ultra Clean Holding, Inc., 476 F. Supp. 2d 1159, 1164, 1167 (N.D. Cal. 2007); Genentech, Inc. v. Insmed Incorporation, 442 F. Supp. 2d 838, 843 (N.D. Cal. 2006), objections overruled sub nom. Genentech, Inc. v. Insmed Inc., No. C04-5429 CW, 2006 WL 2568212 (N.D. Cal. Sept. 5, 2006). However, in Seagate, 497 F.3d at 1360, which relied on Hickman v. Taylor, 329 U.S. 495, 510–11 (1947), the court stated that “[i]n most cases, the demands of our adversarial system of justice will far outweigh any benefits of extending waiver to trial counsel. Seagate, 497 F.3d at 1360. The court further explained that under ordinary circumstances, willfulness will depend largely on an alleged infringer's prelitigation conduct. Id. at 1374. Accordingly, the court found that communications and work product of trial counsel have little, if any, relevance to the willfulness inquiry. Id. In light of the above factors, the court held that asserting the advice-of-counsel defense generally does not affect a waiver of attorney-client privilege and work-product protection with respect to trial counsel. Id. Furthermore, the Federal Circuit has stated that a district court retains its discretion in “unique circumstances” to extend waiver to trial counsel, “such as if a party or counsel engages in chicanery.” Id. at 1375. c. Analysis As noted, the parties do not dispute that Facet is generally entitled to documents and communications relating to the subject matter of infringement of the '635 Patent, including documents and communications that post-date the filing of the Complaint. The parties do dispute whether LifeScan appropriately redacted the opinion letter and whether the waiver extends to trial counsel. i. Redaction Facet asks that LifeScan should be required to produce any redacted portion of the opinion letter that relates to the '635 Patent or provides context for the letter. LifeScan is contesting the validity of the '635 Patent in this action, including on the basis of incorrect inventorship. Incorrect inventorship also serves as the basis for LifeScan's inequitable conduct and unenforceability allegations. “Although infringement and invalidity may be considered as separate defenses to a claim of patent infringement, often the claim of invalidity is the basis for an alleged infringer's good faith belief of noninfringement of a patent.” Verizon California Inc. v. Ronald A. Katz Tech. Licensing, L.P., 266 F. Supp. 2d 1144, 1150 (C.D. Cal. 2003). *5 LifeScan asserted in its Answer to the Amended Complaint that “Facet cannot establish that any alleged infringement of the '635 Patent by LifeScan was willful,” explaining that “LifeScan lacked intent to infringe a valid patent” and “lacked knowledge that the '635 Patent is valid.” Dkt. 97 at 14. Facet argues that because a patent is presumed valid under the Patent Act, 35 U.S.C. 282, it follows from these statements that LifeScan's defense against Facet's willful infringement claim is predicated on its possibly “mistaken” belief that the '635 Patent is invalid and/or unenforceable. Thus, to the extent the redacted portions of the opinion letter contain any opinion or analysis regarding the validity or enforceability of the '635 Patent, those portions should be unredacted. So too should any portion relating to the noninfringement analysis, including, for example, any summary of or reference to that analysis in an introductory or conclusory paragraph. U.S.C. The Court agrees with Facet regarding the scope of the information in the letter that should be unredacted. LifeScan has made the unredacted opinion letter available to the Court and asked that the Court review the letter in camera. After reviewing the document, the Court concludes that some of the redacted material is relevant, as defined above. Specifically, Facet is entitled to unredacted portions of the last two concluding paragraphs, which contain a summary of opinion counsel's assessment. LifeScan will make the modifications to the document as follows and provide them to Facet by May 1, 2023. The last two paragraphs on page 6 of the opinion letter will be unredacted, the following portions will remain redacted: The third word in the first sentence of paragraph one; The whole first sentence of paragraph two; and Words 13 through 16 in the last sentence of the second paragraph. The Motion the Compel the unredacting of LifeScan's opinion letter is DENIED in part and GRANTED in part, subject to new redactions as modified by the Court. ii. Trial counsel There is no absolute rule that waiver should extend to communications between opinion counsel and trial counsel. Seagate, 497 F.3d at 1374. However, when trial counsel and opinion counsel are from the same firm, as they are here, the situation deserves more scrutiny. Nevertheless, other than the fact that counsel are from the same firm, Facet's only argument to support their request that the waiver should extent to trial counsel is that LifeScan is currently “still infringing.” However, as the court noted in Seagate, while the Court has the discretion to extend the waiver, here it does not seem warranted. Opinion counsel is not a member of LifeScan's legal team, is not appearing in this case, and there does not appear to be any “chicanery” that would warrant the extension of the waiver. Facet's Motion to compel further discovery after extending the attorney-client privilege waiver from opinion counsel to trial counsel is therefore DENIED. 2. Discovery on related products Facet requests that the Court order LifeScan to complete its production of documents responsive to Facet's RFP Nos. 30, 34, 36, 38, 44, 92, 93, 96, 97, and 116 and to provide a corporate witness pursuant to Rule 30(b)(6) to testify regarding Facet's Amended Topic Nos. 17–19. Dkt. 143-2 at 35–38. The parties here are not disputing that the information here is discoverable, generally; the parties dispute only what scope of information is appropriate. Id. at 52–56. Here, Facet is looking for discovery on damages and is seeking sales and financial information on non-infringing products—lancing devices, test strips, and glucose meters—that they claim represent derivative or convoyed sales. Id. at 49–50. a. Facts *6 Facet contends LifeScan sells the accused Delica Plus lancets bundled together with its lancing device, test strips, and glucose meters. Dkt. 143-2 at 35. Despite this, and despite the undisputed fact that derivative and convoyed sales are relevant to a reasonable royalty analysis, LifeScan refuses to produce documents relating to—or to provide a deposition witness to discuss—the supply of kits containing the accused products, or of test strips and glucose meters it sells alongside and with the accused product. Facet thus moves to compel documents and deposition testimony regarding these related products. LifeScan contends Facet cannot show it incurred any damages from LifeScan's alleged infringement. Id. at 54–56. LifeScan further contends if Facet survives LifeScan's defenses of noninfringement, invalidity, and unenforceability, there are numerous non-infringing alternatives in the market, which preclude Facet's recovery of damages. Id. LifeScan claims that Facet seeks overly broad discovery regarding LifeScan's products, including substantial financial information, that are unrelated to the alleged infringing products because Facet claims they are derivative or convoyed sales. Id. Derivative or convoyed sales, however, must be functionally related to the patented product and losses must be reasonably foreseeable for those sales to be relevant to a reasonable royalty rate. Id. Here, LifeScan contends the alleged derivative products do not function with the alleged infringing product and thus they are irrelevant to the damages calculation. b. Law “Derivative or convoyed sales ‘must be functionally related to the patented product and losses must be reasonably foreseeable' for those sales to be relevant to a reasonable royalty rate.” Intex Recreation Corp. v. Bestway USA Inc., No. LA-CV-16-3300-JAK-EX, 2021 WL 6618494, at *3 (C.D. Cal. Nov. 10, 2021) (quoting Warsaw Orthopedic, Inc. v. NuVasive, Inc.¸ 778 F.3d 1365, 1375 (Fed. Cir. 2015)). “If the convoyed sale has a use independent of the patented device, that suggests a non-functional relationship.” Id. “When determining whether sales of non-infringing items are relevant to a convoyed or derivative sales theory, courts may examine whether a patentee is able to identify specific products that were relevant to its royalty analysis, articulate a theory as to how the sales of the particular products were connected to the sales of the infringing products, and provide a narrowly tailored discovery request in connection with accused infringing sales.” Id. at *8–9 (internal quotations omitted). c. Analysis LifeScan contends that “an appropriate example of a convoyed sale in this case is the Delica Plus lancing device—a non-infringing device that was created to be exclusively used with the allegedly infringing Delica Plus lancet. They are sold both separately and together and one cannot be used without the other. Conversely, meters and strips are not alleged to infringe the Patent-in-Suit and operate independently of the Delica Plus lancets and lancing devices. There is no requirement that a person who uses a Delica Plus lancet or lancing device must then use a meter or strip that is also sold by LifeScan— the products are simply bundled together for convenience, and not because they function together.” Dkt. 145-1 at 56. However, Facet has explained that, through discovery, they have received LifeScan's own documents illustrating how sales of the Delica Plus impacted sales of testing strips and meters. Given that LifeScan's own documents indicate the Delica Plus had some impact on the sales of these other items, this Court finds Facet has met its low burden of showing that sales of the bundles, testing strips, and meters may be relevant or lead to relevant information regarding the damages calculation. *7 Facet's Motion to Compel Document Production and Deposition Testimony Regarding Testing Supplies Related to the Accused Products is therefore GRANTED. III. COSTS AND FEES A. APPLICABLE LAW Pursuant to Federal Rule of Civil Procedure 37(a)(5)(B), if a discovery motion is denied, “the court must, after giving an opportunity to be heard, require the movant, the attorney filing the motion, or both to pay the party or deponent who opposed the motion its reasonable expenses incurred in opposing the motion, including attorney's fees,” unless the motion was “substantially justified” or “other circumstances make an award of expenses unjust.” Id. B. ANALYSIS Here, neither party has asked for costs. Further, since both Motions were denied in part and granted in part the award of costs is discretionary. Still, in reviewing the emails submitted to the Court as exhibits, the Court notes that both parties appear to have contributed to the breakdown in fruitful communication. With that in mind, both parties are cautioned to remember that while no one expects discovery “to be a non-stop exchange of pleasantries,” Freeman v. Schointuck, 192 F.R.D. 187, 189 (D. Md. 2000), both parties have a general responsibility to approach the discovery process in good faith and avoid unnecessary court intervention, see Fed. R. Civ. P. 37(a)(1) (requiring parties to make a good faith effort to resolve discovery disputes without court action). The Court will not treat either party as graciously should these matters come before it a second time. Accordingly, both parties are admonished to work together in good faith to complete their discovery obligations and reach agreements on future discovery disputes. IV. ORDER Facet's Motion, Dkt. 131, is GRANTED in part and DENIED in part, and LifeScan's Motion, Dkt. 131, is DENIED.: (1) Facet's Motion to Strike Invalidity Contentions is DENIED without prejudice to filing before the district judge. (2) Facet's request for LifeScan to provide a list to Facet of twelve (12) likely witnesses to testify at trial is DENIED. (3) Facet's Motion to increase the number of depositions allowed to twelve (12) for both parties is GRANTED. (4) Facet's Motion to extend the time to take depositions is DENIED without prejudice to renewing its request to the district judge. (5) LifeScan's Motion to enforce the arbitration's confidentiality provision by way of barring Facet from using the arbitration materials is DENIED. Facet's Motion, Dkt. 143, is GRANTED in part and DENIED in part. (1) Facet's Motion to Compel the unredacting of LifeScan's opinion letter is DENIED in part and GRANTED in part. (2) LifeScan will make the modifications to the document as follows and provide them to Facet by May 1, 2023: a. The last two paragraphs on page 6 of the opinion letter will be unredacted, the following portions will remain redacted: i. The third word in the first sentence of paragraph one; ii. The whole first sentence of paragraph two; and iii. Words 13 through 16 in the last sentence of the second paragraph. (3) Facet's Motion to extend waiver of privilege to trial counsel is DENIED. (4) Facet's Motion to Compel document production and deposition testimony regarding testing supplies related to the accused products is GRANTED. *8 IT IS SO ORDERED. Footnotes [1] The Court addresses this dispute briefly, to avoid risking the disclosure of any confidential information. The plain language of the confidentiality agreement that was the subject of this dispute is not explicitly discussed or referenced.