Case: 5:12-cv-01533-SL Doc #: 167 Filed: 12/16/13 1 of 14.

PageID #: 2471

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF OHIO EASTERN DIVISION

ZECOTECH IMAGING SYSTEMS, PTE. LTD., et al., Plaintiffs, v. SAINT-GOBAIN CERAMICS & PLASTICS INC., et al., Defendants.

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CASE No.: 5:12CV1533

JUDGE SARA LIOI Magistrate Judge George J. Limbert

ORDER

On October 16, 2013, Plaintiffs, Zecotech Imaging Systems PTE Ltd. and Beijing OptoElectronics Technology Co., filed a Notice of Discovery Dispute. ECF Dkt. #136. On October 23, 2013, the discovery dispute was referred to the undersigned for resolution. Following letter briefing by the parties, See ECF Dkt. ##140, 141, and 142, a telephonic status conference was conducted on November 8, 2013. According to the letter briefs filed by Defendants, Saint-Gobain Ceramics & Plastics Inc. (Saint-Gobain), and Philips Healthcare Informatics Inc. d/b/a Philips Healthcare and Philips Medical Systems (Cleveland), Inc. (the Philips defendants), the parties had not met and conferred in an effort to resolve the discovery disputes before the Notice of Discovery Dispute was filed. As a consequence, the undersigned scheduled a hearing on the discovery disputes for December 10, 2013, and instructed the parties to meet and confer prior to the hearing in order to attempt to resolve the discovery disputes without further court intervention.

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The parties were unable to resolve their differences, and, instead, additional discovery disputes arose in the interim between the telephone conference and the hearing. Plaintiffs filed a second Notice of Discovery Dispute relating specifically to Saint-Gobain on December 2, 2013, ECF Dkt. #149, and a third Notice of Discovery Dispute relating specifically to Philips on December 4, 2013. ECF Dkt. #153. The parties submitted additional letter briefs in order to more fully explain the new discovery disputes. ECF Dkt. ##157, 158, and 159 and 160. Prior to the hearing, the parties were able to resolve three of the disputes those relating to responses to Interrogatories ##1 and 4, and Saint-Gobains crystal growth reports from June 2008 to the present as well as many of Defendants discovery issues, which were not the subject of the current dispute. The parties spread their agreement regarding future discovery production on the record prior to the commencement of the hearing. A brief explanation of the claims is necessary to understand the issue raised by the parties in this discovery dispute. Plaintiffs allege that Saint-Gobain infringes Plaintiffs patent, U.S. Patent No. 7,132,060 B2 (the 060 patent), by manufacturing scintillation crystals that have a chemical composition covered by the 060 patent. Scintillation crystals emit light when exposed to ionizing radiation, and are important to devices used in the nuclear medicine industry, including Positron Emission Tomography (PET) scanners. Plaintiffs further allege that the Philips defendants have infringed the 060 patent by utilizing Saint-Gobains crystals in their PET scanners. Determining the proper scope of discovery falls within the broad discretion of the trial court. Lewis v. ACB Business Servs., Inc., 135 F.3d 389, 402 (6th Cir.1998). A party may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense. Fed.R.Civ.P. 26(b)(1). The federal discovery rules are to be accorded a broad and liberal

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treatment. Herbert v. Lando, 441 U.S. 153, 177, 99 S.Ct. 1635, 60 L.Ed.2d 115 (1979). The term relevant, for the purposes of discovery, has been construed broadly to encompass any matter that bears on, or that reasonably could lead to other matter that could bear on, any issue that is or may be in the case. Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351, 98 S.Ct. 2380, 57 L.Ed.2d 253 (1978). [D]iscovery is permissible where it appears reasonably calculated to lead to the discovery of admissible evidence. Goodyear Tire & Rubber Co. v. Chiles Power Supply, Inc., 332 F.3d 976, 982 (6th Cir.2003) (quoting Fed.R.Civ.P. 26(b)(1)). Although a plaintiff should not be denied access to information necessary to establish [his] claim, neither may a plaintiff be permitted to go fishing and a trial court retains discretion to determine that a discovery request is too broad and oppressive. Surles v. Greyhound Lines, Inc., 474 F.3d 288, 305 (6th Cir.2007), quoting Marshall v. Westinghouse Elec. Corp., 576 F.2d 588, 592 (5th Cir.1978). The Court has discretion to limit or even preclude discovery which meets the general standard of relevance found in Rule 26(b)(1) if the discovery is unreasonably duplicative, or the burden of providing discovery outweighs the benefits, taking into account factors such as the importance of the requested discovery to the central issues in the case, the amount in controversy, and the parties resources. See Fed.R.Civ.P. 26(b)(2). The discovery at issue for the most part relates to Plaintiffs efforts to determine the composition of Saint-Gobain crystals in order to prove that the crystals infringe the 060 patent. The parties disagreement as to the scope of discovery is predicated upon differing opinions as to the propriety of the methods Plaintiffs plan to undertake to prove or disprove infringement. SaintGobain argues that it has provided the starting formulas for the crystals and the crystals themselves, and, as a consequence, Plaintiffs have sufficient evidence of crystal composition. Plaintiffs counter

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that the crystals at issue are not a lined compound, meaning start to finish, exactly the same composition [Saint-Gobain] starts out with is what you get out of. They are a solid solution. And a solid solution means that these crystals can change their composition during the growth process. ECF Dkt. #164 (Tr.) at 25-26. Defendants further argue that because the Court has ordered joint testing by a third-party lab chosen by the parties, employing a joint protocol, also chosen by the parties no additional independent testing should be undertaken or additional testing results should be discoverable, particularly since the joint testing results revealed no infringement. Plaintiffs counter that the joint testing results are hotly disputed, and that Plaintiffs independent testing of Saint-Gobain crystals purchased on the open market show infringement. Further, Plaintiffs question whether the crystal upon which the joint testing was performed meets the performance specifications of Philips. Tr. at 33. Based upon the liberal nature of the discovery rules, Plaintiffs argue that Defendants should be ordered to produce the requested discovery. The undersigned will address each of the remaining disputes beginning with Plaintiffs requests for discovery from Saint-Gobain. Plaintiffs request: (1) data generated by Saint-Gobains crystal growth software; (2) compositional test reports and protocol; (3) a custodial search of the documents of a former Saint-Gobain employee; (4) documents from a prior litigation ordered to be produced by the undersigned in a previous Order; and (5) information regarding the existence of residual materials from Saint-Gobains compositional testing.1

Plaintiffs assert that they have provided information regarding the existence of residual material from Plaintiffs tests of Saint-Gobains crystals.

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A brief explanation of each request is necessary to understand the arguments of the parties. According to the website of Cyberstar, the manufacturer of the crystal-growth puller used by SaintGobain, Cyberstars machines are equipped with software that monitors and stores information regarding the parameters of the crystal growth process. Plaintiffs have submitted the declaration of one of their experts, Lucien N. Brush, in which Dr. Brush avers that the stored information2 would be useful in formulating his opinion as to the chemical composition of the crystal at issue in this case. At the hearing, Plaintiffs argued that the data points from the software is essential to create a model of crystal growth to determine whether the final crystal infringes [Plaintiffs] compositional claims. Tr. at 23. Plaintiffs further argued that the data is easily exportable. SaintGobain asserted that the first request for the data at issue occurred on November 19, 2013, that the data has not been the subject of a meet and confer, and that Saint-Gobain has not had the opportunity to determine whether production of the Cyberstar data would be burdensome. Saint-Gobain further argued that the data recorded by the Cyberstar software has nothing to do with the composition of the crystals. Saint-Gobain likened Plaintiffs request to going into a GM plant and asking for the software for the robots that put together the equipment. Tr. at 29. Finally, Saint-Gobain asserted that Dr. Brushs declaration falls far short of establishing the relevance of the data requested, and that you [do not] need to do modeling when you have the end crystals. Tr. at 29. Having considered the arguments of both sides, the undersigned finds that the data generated by the

According to Cyberstars website, All parameters (crucible diameter, solid and liquid density, crystal shape, growth speed, rotation speed, cooling duration...) needed to perform a crystal growth run are stored in the database.

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Cyberstar software is relevant and reasonably calculated to lead to the discovery of admissible evidence. Accordingly, Saint-Gobain shall furnish the data on or before January 13, 2014. Next, Saint-Gobain has developed a test protocol for conducting compositional testing of crystals by the Inductively Coupled Plasma Mass Spectrometry (ICP-MS) test method. Plaintiffs have requested the production of Saint-Gobains protocol for testing crystals by ICP-MS method, and Saint-Gobain has provided those documents.3 However, Plaintiffs now seek documents related to any and all compositional testing, not just ICP-MS test results. Plaintiffs contend that they only recently discovered that Saint-Gobain had undertaken compositional testing that did not involve the ICP-MS test method. Saint-Gobain asserts that it has complied with the original request for production of documents, which involved searching ten years of documents, and that Plaintiffs are now attempting to broaden the scope of their request. SaintGobain argued that Plaintiffs amended request for documents wastes time and prevents the parties from moving forward and making progress with the case. Counsel for Saint-Gobain warranted to the undersigned that Saint-Gobain has not withheld test results of which she is aware. Having considered the arguments of both sides, the undersigned finds that the test results, to the extent that they exist, are relevant and reasonably calculated to lead to the discovery of admissible evidence. Accordingly, Saint-Gobain shall determine whether additional compositional testing results exist, and, if so, furnish the test results to Plaintiffs by January 13, 2014.

Plaintiffs asked the undersigned to order Saint-Gobain to inform Plaintiffs where the ICP-MS test results are in Saint-Gobains document production, because Plaintiffs cannot find them. Counsel for SaintGobain volunteered to identify the location of the test results.

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Third, Plaintiffs request a custodial search of the documents4 of Zbigniew Galazka, a former Saint-Gobain employee who left the company in 2007, if any of his documents are still in the custody of Saint-Gobain. Plaintiffs suggested a custodial search similar to the searches conducted on other custodians at Saint-Gobain. Saint-Gobain responds that Plaintiffs have failed to

demonstrate that Mr. Galazkas documents contain relevant information that has not been otherwise produced from the files of other custodians whose records Saint-Gobain has already produced. Having considered the arguments of both sides, the undersigned finds that Mr. Galazkas documents, to the extent that they exist, are relevant and reasonably calculated to lead to the discovery of admissible evidence. Accordingly, Saint-Gobain shall conduct a custodial search and furnish the documents to Plaintiffs by January 13, 2014. Fourth, Plaintiffs contend that Saint-Gobain has not fully complied with the undersigneds July 3, 2013 Order regarding documents from the litigation captioned Siemens Med. Solutions USA, Inc. v. Saint-Gobain Ceramics & Plastics, Inc., No. 07CV0190 (Del. 2007). See ECF Dkt. #130. Specifically, Plaintiffs request at least two expert reports about damages and all trial transcripts. ECF Dkt. #150 at p. 4. Saint-Gobain contends that all documents from the Siemens litigation have been produced, with the exception of confidential information subject to a protective order, which Siemens has refused to disclose. Saint-Gobain further argues that the information sought by Plaintiffs relates to a different patent (a Siemens patent) and different issues than are presented in this case, and, therefore, is not relevant. Finally, Saint-Gobain argues that Plaintiffs are requesting that Saint-Gobain attempt to find documents at other law firms, and to undertake a second analysis

Of particular interest to Plaintiffs is the program of PML process developing at [Saint-Gobain] based upon his experience in PML (SiO2 stoechiometry variation, charge loading method, growth atmosphere, seed orientation). ECF Dkt. #150.

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of whether there is restricted information or confidential information, and that Plaintiffs request is overly burdensome. The July 3, 2013 Order, read, in pertinent part: Accordingly, the Court ORDERS that the contract attorney, who will be paid by Plaintiffs at a rate of $100.00 per hour, for a maximum of 25 hours or $2500.00, review the contents of the 60 boxes and identify and pull those documents from the Siemens case that are responsive to Plaintiffs discovery requests, which includes: (1) (2) (3) the deposition transcripts; the expert reports; any and all sealed trial court filings, including interrogatory responses, admissions, and any other written pleadings or discovery; trial transcripts; and all demonstrative evidence.

(4) (5)

Upon identification and segregation of these materials, the contract attorney is to submit them to counsel for Defendants and Defendants shall thereafter produce the materials to Plaintiffs no later than July 19, 2013. For those materials that Defendants believe are protected, privileged or otherwise not subject to production, Defendants shall also provide to Plaintiffs a log that accompanies the produced documents. That log shall identify the document withheld and an explanation as to the reason for nonproduction. Defendants shall produce the log also by July 19, 2013. ECF Dkt. #130 at 4. Having considered the arguments of both sides, the undersigned finds that the requested documents are relevant and reasonably calculated to lead to the discovery of admissible evidence. Accordingly, to the extent that the documents are not protected, privileged or otherwise not subject to production, Saint-Gobain shall furnish the remaining documents identified in the undersigneds July 3, 2013 Order to Plaintiffs by January 13, 2014.

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In their final argument with respect to discovery from Saint-Gobain, Plaintiff ask SaintGobain whether it has residual powder from previous crystal testing in its possession. At the hearing, Plaintiffs predicated their argument on the fact that Saint-Gobain had initially told them that it had a single pixel in it possession, but Plaintiffs recently came to believe that Saint-Gobain also had residual powder in its custody. Plaintiffs clarified at the hearing that they only want to know if the residual powder exists at this point in the discovery process. Saint-Gobain asserted that it has already sifted through ten years of documents in order to produce the compositional test results requested by Plaintiffs. As a consequence, Saint-Gobain argued that Plaintiffs current request is overly burdensome, to the extent that it would force Saint-Gobain to undertake a second investigation solely to determine if such residual material from testing done in the ordinary course of business exists. Saint-Gobain asserted that the joint testing, which was undertaken on jointly selected samples, showed non-infringement. Saint-Gobain further asserted that [Plaintiffs have] seen the starting point that says [Saint-Gobain does not] infringe, and theyve seen the end point that says [Saint-Gobain does not] infringe, and theyre looking for something to keep them alive. Tr. at 38. At a status conference with the Honorable Sara Lioi, conducted immediately following the hearing before the undersigned, Judge Lioi indicated her intention to set briefing schedules on the issues of sample crystal testing at a status conference to be held on February 6, 2014. Accordingly, the undersigned shall defer the resolution of the parties discovery dispute regarding residual powder from previous crystal testing to Judge Lioi. Turning to Plaintiffs discovery disputes with the Philips defendants, Plaintiffs request: (1) the production of sample crystals in the Philips defendants possession, (2) another document search

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that includes search terms specifically selected by Plaintiffs; (3) any and all license agreements that the Philips defendants have with respect to all of the components of its PET scanners; (4) documents regarding the Philips defendants other crystal supplier; and (5) financial information for the PET scanners. First, Plaintiffs request sample crystals that the Philips defendants have within its possession. The Philips defendants contends that the requested crystals are part of a Saint-Gobain module that were sent to CPI for refurbishment and repair due to adhesion quality (glue) issues (Philips mixed module). The Philips defendants contends that the Philips mixed module includes some unknown and unidentifiable mix of Saint-Gobain crystals and CPI crystals, which invites confusion, misidentification, and chain of custody issues. ECF Dkt. #157 at 2. Plaintiffs argue that the possibility of confusion supports Plaintiffs contention that the Philips defendants cannot operate its PET scanners with a non-infringing crystal. At a status conference with the Honorable Sara Lioi, conducted immediately following the hearing before the undersigned, Judge Lioi instructed Plaintiffs to determine if it is necessary or feasible to conduct sample testing on crystals in the Philips mixed module and to propose a testing protocol by January 14, 2014. See Non-document entry dated December 10, 2013. The minutes of the status conference also reveal that Plaintiffs may withdraw their request for the mixed module if they can acquire crystals from the Philips defendants other supplier of scintillation crystals, Crystal Photonics Inc. (CPI). Plaintiffs efforts to acquire crystals from CPI are the subject of a hearing currently scheduled for December 17, 2013 in the Middle District of Florida. In addition and as stated previously, Judge Lioi indicated her intention to set briefing schedules on the issue of sample

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crystal testing at a status conference to be held on February 6, 2014. Accordingly, the undersigned shall defer the resolution of the parties discovery dispute regarding the mixed module to Judge Lioi. Next, Plaintiff requests that the Philips defendants undertake another search of their documents, as the original search only resulted in the production of 103 documents. Plaintiffs are concerned that the original search did not include all relevant search terms. The Philips defendants argued that they requested search terms from Plaintiffs prior to undertaking the previous search, specifically explaining to Plaintiffs counsel that they did not want to have to undertake another search in the future. However, Plaintiffs did not provide the requested search terms. The Philips defendants further assert that Plaintiffs proposed search terms are too general and will result in a voluminous document production with largely irrelevant material. Having considered the

arguments of both sides, the undersigned orders the Philips defendants to undertake another document search using Plaintiffs requested search terms to be completed on or before January 14, 2014. Third, Plaintiffs have requested information regarding any and all license agreements that Philips has with respect to all of the components of its PET Scanners. Philips has responded that it has no license agreements for the scintillation crystals at issue in this case. Philips argues that license agreements that relate to other components of the PET scanners are not relevant to the case at bar or reasonably related to the patented technology at issue here. Nonetheless, Philips has offered to produce any licenses for PET scanner hardware components, but Plaintiffs continue to request license agreements for any and all components, including software components.5

Counsel for the Philips defendants indicated at the hearing that the software licenses at issue involve bed positioning and image manipulation. Tr. at 62.

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In determining a reasonable royalty, courts consider, among other factors, [t]he rates paid by the licensee for the use of other patents comparable to the patent in the suit. See

Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F.Supp. 1116 (S.D.N.Y.1970), modified, Georgia-Pacific Corp. v. U.S. Plywood-Champion Papers, Inc., 446 F.2d 295 (2d Cir.1971), While Georgia-Pacific does indicate that the patents to which courts may look to determine a reasonable royalty rate must be comparable, courts have often interpreted this factor broadly. See Mobil Oil Corp. v. Amoco Chems, Corp., 915 F.Supp. 1333, 1354 (D.Del.1994); Procter & Gamble Co. v. Paragon Trade Brands, Inc., 989 F.Supp. 547, 607-08 (D.Del.1997). Plaintiffs are nonetheless required to articulate a reasonable relationship between the claimed technology and the licensed technology in order to support a broad request for licenses. See, e.g., Bally Techs. Inc. v. Business Intelligence Sys. Solutions, Inc., 2011 WL 3892221, *3 (D. Nev. 2011) (denying motion to compel production of licenses where plaintiff failed to show that license agreements involving other patents are sufficiently relevant to be discoverable.); Probert v. The Clorox Co., 2009 WL 1011490, *9-*10 (D. Utah 2009) (denying motion to compel production of license agreements for products that were not comparable to the patented product); Accord Resqnet.Com, Inc. v. Lansa, Inc., 594 F.3d 860, 869 (Fed. Cir. 2010) (This court has long required district courts performing reasonable royalty calculations to exercise vigilance when considering past licenses to technologies other than the patent in suit. . .particularly when it is doubtful that the technology of those license agreements is in any way similar to the technology being litigated here.). Plaintiffs have offered the declaration of one of their experts, Michael J. Lasinski in support of its request for all of the licenses for the PET scanners. According to the declaration, Lasinski

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want[s] to review licenses to all components either hardware of software of Philips medical imaging devices. ECF Dkt. #159-3. Having considered the arguments of both sides, the

undersigned finds that there exists a reasonable relationship between the licenses for scintillation crystals and the software licenses at issue in this case. Accordingly, Saint-Gobain shall furnish any and all software licenses requested by Plaintiffs on or before January 14, 2014. Fourth, Plaintiffs seek information regarding CPI, including the number of crystals purchased from CPI and correspondence about choosing CPI as a supplier. Plaintiffs contend that this information is relevant to their calculation of lost profits. In a previous discovery dispute, the undersigned ordered Philips to produce documents sufficient to show the chemical composition and manufacturer of all crystals used in the Philips defendants PET scanners designed, manufactured or sold since November 7, 2006, including those supplied by CPI. See ECF Dkt. #125. The Philips defendants contends that they have fully complied with the undersigneds Order, and, insofar as Plaintiffs have not asserted that CPIs crystals infringe the 060 patent6, the information relating to the number of crystals purchased and the correspondence regarding the Philips defendants choice of CPI as a supplier is not relevant. The Philips defendants further argue that they have produced some discovery relating to their business relationship with CPI, as a compromise, but that Plaintiffs current request is overly burdensome and unlikely to lead to discoverable information. Having considered the arguments of both sides, the undersigned finds that Plaintiffs have misinterpreted the undersigneds previous Order. The Philips defendants have complied with the

After CPI was identified as Saint-Gobains other supplier, Plaintiffs waited three months before seeking discovery. A hearing is scheduled on December 17, 2013 in the Middle District of Florida to hear CPIs objections to Plaintiffs subpoena.

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Order, insofar as they have furnished documents that identify CPI as the manufacturer of the crystals. Counsel for the Philips defendants warranted at the hearing that they have no documents relating to the composition of the CPI crystals because they do not manufacture them. Moreover, Plaintiffs have not demonstrated that the additional information sought, that is, documents revealing the number of crystals purchased from CPI and the Philips defendants correspondence about choosing CPI, is relevant, insofar as they have not accused CPI of infringement. Finally, the parties previously agreed that the Philips defendants would produce financial information for its PET scanners. Plaintiffs believed that the agreement covered all of Philips PET scanners, not just those comprised exclusively of Saint-Gobain crystals. The Philips defendants, on the other hand, argue that Plaintiffs originally sought financial information solely on the allegedly infringing PET scanners. The Philips defendants argue that financial information regarding PET scanners with non-infringing crystals is irrelevant. At the status conference immediately following the hearing, Judge Lioi indicated her intention to set a briefing schedule on the issue of lost profits on PET scanners for February 6, 2014. Accordingly, the undersigned defers the resolution of Plaintiffs request for financial information on the PET scanners with the non-infringing crystals to Judge Lioi. IT IS SO ORDERED.

DATE: December 16, 2013 /s/ George J. Limbert GEORGE J. LIMBERT UNITED STATES MAGISTRATE JUDGE

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