Neonode Smartphone LLC v. Apple Inc

• Court: District Court, N.D. California
• Decided: April 29, 2022
• Docket: 3:21-cv-08872
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 EUREKA DIVISION 7 8 NEONODE SMARTPHONE LLC, Case No. 21-cv-08872-EMC (RMI)

9 Plaintiff, ORDER RE: DISCOVERY DISPUTE 10 v. LETTER BRIEF

11 APPLE INC, Re: Dkt. No. 90 12 Defendant.

13 14 Now pending before the court is a discovery dispute letter brief (dkt. 90) in a patent 15 infringement suit.1 Plaintiff, Neonode Smartphone LLC (“Neonode”), owns two patents pertaining 16 to user interfaces for certain types of mobile handheld devices. See Compl. (dkt. 2) at 1. Neonode 17 has accused Defendant Apple, Inc. (“Apple”) of infringing those patents – both directly and 18 indirectly – under a number of theories. See id. at 12-41. Neonode (a Wyoming limited liability 19 company) initially filed its suit in the Western District of Texas because of the notion that Apple 20 maintains a branch office in that district. Id. at 3. Near the outset of the litigation, Apple moved to 21 transfer venue to this district. See Def.’s Mot. (dkt. 27) at 5-6. Shortly after the district court in 22 Texas denied Apple’s motion to transfer venue to this district (see dkt. 65), the Parties stipulated 23 to stay various aspects of this case, “with the exception of any work related to discovery in 24 Sweden.” See Stip. (dkt. 66) at 1. Thereafter, following a ruling by the Court of Appeals for the 25 Federal Circuit, the case was transferred to this district after all (see dkts. 75, 76). 26 More recently, on April 12, 2021, Neonode informed Apple that a Swedish court has 27 1 scheduled in-person depositions in Sweden for Magnus Goertz and Thomas Eriksson on May 11 2 and May 13, 2022. See Ltr. Br. (dkt. 90) at 1. Magnus Goertz is the named inventor of both of 3 Neonode’s patents at issue in this suit (the ’879 and ‘993 patents). See Compl. (dkt. 1) at 3. 4 Thomas Eriksson is the CEO of Neonode Technologies AB and Neonode, Inc. See id. at 7. Mr. 5 Goertz is not represented by Neononode’s counsel and he is not a party to this litigation; Mr. 6 Eriksson, also a non-party, has been retained by Neonode as a consultant, “and his consultancy 7 [reportedly] encompasses his expert opinion regarding matters at issue in this litigation.” See Ltr. 8 Br. (dkt. 90) at 1, 4 n.2. In advance of these Swedish depositions, in order to both prepare for the 9 depositions and to effectively cross-examine these two witnesses, Apple hastily requested 10 production of (1) all documents that Neonode or its counsel has obtained from Messrs. Goertz and 11 Eriksson; (2) all communications between Neonode or its counsel and Messrs. Goertz and 12 Eriksson; and (3) all documents Neonode intends to use in the course of the Swedish depositions. 13 Id. at 1. Neonode objects on five grounds (see id. at 3-7), and for the reasons outlined below, 14 Neonode’s objections are overruled and Apple’s request to compel the production in question is 15 granted. 16 Before proceeding to Neonode’s arguments, the court will note several generally- 17 applicable principles related to discovery in federal civil litigation. Under Federal Rule of Civil 18 Procedure 26(b), “[p]arties may obtain discovery regarding any nonprivileged matter that is 19 relevant to any party’s claim or defense — including the existence, description, nature, custody, 20 condition, and location of any documents or other tangible things and the identity and location of 21 persons who know of any discoverable matter.” Additionally, with a showing of good cause, “the 22 court may order discovery of any matter relevant to the subject matter involved in the action.” Id. 23 “The requirement of relevancy should be construed liberally and with common sense, rather than 24 in terms of narrow legalisms.” Miller v. Pancucci, 141 F.R.D. 292, 296 (C.D. Cal. 1992). 25 Furthermore, “the deposition-discovery rules are to be accorded a broad and liberal treatment.” 26 See Hickman v. Taylor, 329 U.S. 495, 507 (1947). The Hickman Court explained that a policy 27 favoring liberal discovery facilitates proper litigation (see id.), and this policy is evidenced by 1 or defense of any party. Relevant information need not even be admissible at the trial and would 2 still be subject to discovery so long as the discovery demand appears reasonably calculated to lead 3 to the discovery of admissible evidence – in which regard, district courts have broad discretion in 4 resolving whether the information sought is relevant for discovery purposes. See Surfvivor Media, 5 Inc. v. Survivor Prods., 406 F.3d 625, 635 (9th Cir. 2005). 6 The attorney-client privilege excepts from discovery any communications concerning legal 7 advice sought from an attorney in his or her capacity as a professional legal advisor, where the 8 communication is made in confidence, is intended to be maintained in confidence by the client, 9 and is not disclosed to a third party. See United States v. Sanmina Corp., 968 F.3d 1107, 1116 (9th 10 Cir. 2020). The privilege extends to a client’s confidential disclosures to an attorney in order to 11 obtain legal advice, as well as an attorney’s advice in response to such disclosures. United States 12 v. Ruehle, 583 F.3d 600, 607 (9th Cir. 2009) (citations and quotations omitted). “Because it 13 impedes full and free discovery of the truth, the attorney-client privilege is strictly construed.” Id. 14 On the other hand, the work product doctrine protects from discovery materials that are prepared 15 by, or for, a party or its representative in anticipation of litigation. Fed. R. Civ. P. 26(b)(3). Unlike 16 privileges, the work product doctrine provides only a limited and qualified protection against the 17 discovery of trial preparation materials that “reveal an attorney’s strategy, intended lines of proof, 18 evaluation of strengths and weaknesses, and inferences drawn from interviews.” See Hickman, 329 19 U.S. at 511. Its purpose is to prevent attorneys from obtaining an unfair advantage “on wits 20 borrowed from the adversary.” Id. at 516 (Jackson, J., concurring); see also Upjohn Co. v. United 21 States, 449 U.S. 383, 390-91 (1981). A voluntary disclosure of work product waives the protection 22 where such disclosure is made to an adversary in litigation or where the disclosure is made in a 23 manner that substantially increases the opportunities for potential adversaries to obtain the work 24 product. Sanmina Corp., 968 F.3d at 1121. The party asserting attorney-client privilege or work 25 product protection bears the burden of proving that the privilege or protection applies. See Ruehle, 26 583 F.3d at 607-08; see also In re Appl. of Republic of Ecuador, 280 F.R.D. 506, 514 (N.D. Cal. 27 2012). 1 diversity cases, by a uniform federal standard embodied in Fed. R. Civ. P. 26(b)(3), which 2 essentially codifies the rule of Hickman. See United Coal Cos. v. Powell Const. Co., 839 F.2d 958, 3 966 (3d Cir. 1988); see also PepsiCo, Inc. v. Baird, Kurtz & Dobson LLP, 305 F.3d 813, 817 (8th 4 Cir. 2002) (similar); Baker v. General Motors Corp., 209 F.3d 1051, 1053 (8th Cir. 2000) 5 (similar); FDIC v. Fidelity & Deposit Co. of Maryland, 196 F.R.D. 375, 381 (S.D. Cal. 2000) 6 (quoting from and adopting United Coal). As mentioned above, unlike a true privilege, the work 7 product doctrine provides only a qualified and limited degree of immunity from discovery – as the 8 Rule codifying the doctrine itself indicates – even after a party resisting discovery has met its 9 initial burden of showing that material is protected, the material nevertheless must be disclosed 10 “upon a showing that the party seeking discovery has substantial need of the materials in the 11 preparation of the party’s case and that the party is unable without undue hardship to obtain the 12 substantial equivalent of the materials by other means.” See Fed. R. Civ. P. 26(b)(3). 13 Given that understanding, the court can now proceed to addressing the objections at bar. 14 Neonode’s first justification for opposing the discovery sought by Apple is to state that Apple has 15 not yet formally “served discovery requiring disclosure of the materials they now demand,” and 16 that Apple “cannot simply send Plaintiff’s counsel an email demanding documents.” See Ltr. Br. 17 3-4. The court finds that this argument places form over substance. While it is possible for the 18 court to force Apple to serve formal document requests on Neonode in the manner suggested, the 19 court can conceive of no reason to make Apple jump through that hoop at this time and under 20 these circumstances. Given the truncated timeframe attending the Swedish depositions, forcing 21 Apple to undertake the empty formality of serving these document requests in the manner 22 demanded by Neonode would serve no purpose other than delaying Apple’s access to these 23 documents, a spectacle which would inure to the benefit of no party. Neonode already knows what 24 documents Apple seeks, and Neonode has already lodged its objections to producing those 25 documents. Given these circumstances, the court sees no reason to put Apple to the trouble of 26 engaging in a hollow formality for no legitimate reason other than to perhaps obstruct Apple’s 27 access to discovery in advance of the rapidly-approaching dates for the Swedish depositions. Nor 1 demands are brought to Neonode’s attention are to be so rigid and inflexible as to fall outside of 2 this court’s discretion as to the manner in which they might be enforced. As mentioned above, 3 Neonode’s first objection to producing the discovery in question unreasonably places form over 4 substance and is therefore OVERRULED. 5 Neonode’s second argument in opposing the discovery demands in question complains that 6 Apple’s requests are overly broad to the extent that they seek all communications between Messrs. 7 Goertz or Eriksson and Plaintiff without any limitation. See Ltr. Br. (dkt. 90) at 4. More 8 specifically, Neonode submits that Apple “fail[s] to explain how emails with Goertz concerning an 9 unconsummated consulting agreement might be relevant to any party’s claim or defense, or even 10 to impeachment.” Id. However, given that Magnus Goertz is the named inventor of both patents in 11 suit (see Compl. (dkt. 1) at 3), and given the liberal approach to relevancy described above, the 12 court finds merit in Apple’s explanation to the effect that “[t]hese documents and communications 13 are relevant at least to conception and reduction of practice of the alleged inventions (or lack 14 thereof), validity of the claims, and credibility of the witnesses.” See Ltr. Br. (dkt. 90) at 1. 15 Notably, Neonode has not asserted that producing these communications would be burdensome or 16 disproportional to the needs of the case (see id. at 4), instead, the argument is that the breadth of 17 the request (all communications) renders some of its sweep potentially irrelevant; however, for the 18 reasons advanced by Apple, the undersigned disagrees. Accordingly, Neonode’s second objection 19 is OVERRULED. 20 Neonode’s third argument asserts that “any communications between Eriksson and 21 Plaintiff, and identification of documents provided by Eriksson to Plaintiff, after the execution of 22 the consulting agreement are work product.” Id. More specifically, Neonode contends that because 23 of “the fact that Eriksson provided [certain documents and communications] to counsel [the 24 documents would necessarily] reflect[] counsel’s requests for particular documents and categories 25 of documents, which in turn reflects counsel’s opinions and evaluation of the importance to the 26 case of certain types of documents.” Id. The court finds this concern to be exaggerated. First, 27 while it is possible that some such communications may fall under the aegis of the work product 1 would fit that rubric. Second, rather than to assert this argument in categorical form at this 2 premature juncture, the court finds that a better method is for Neonode to detail such concerns as 3 to specific and individual documents or communications in a privilege log; and, if a further 4 dispute arises about the propriety of one or more of Neonode’s work product immunity assertions 5 as to specific documents and communications, the Parties can present such a dispute to the 6 undersigned for in camera review and resolution. Additionally, as described above, the work 7 product doctrine is merely a limited and qualified immunity doctrine, not an absolute privilege – 8 meaning that even when a document may fall fully within the ambit of the doctrine, circumstances 9 may be present that would nevertheless dictate its production anyway. Accordingly, for these 10 reasons, the court finds that Neonode’s third argument is both overblown (in that the argument is 11 asserted in a manner as to have a scope that is excessively broad) and premature. The undersigned 12 is willing to review and rule upon work product assertions in a specific and focused manner (as 13 might relate to individual documents and communications that the court will have reviewed in 14 camera), not in a generalized, abstract, and wholesale manner as Neonode appears to suggest. 15 Accordingly, Neonode’s third objection is likewise OVERRULED. 16 Neonode’s fourth argument substantially overlaps with its third argument. In this regard, 17 Neonode contends that “[t]he selection of documents that counsel intends to use at deposition is 18 protected by the work product privilege, because it reflects counsel’s strategy and opinions 19 regarding the particular evidence that may be most supportive (or adverse) to his client’s position . 20 . . [and therefore] [a]dvance disclosure of Plaintiff’s counsel’s selection of documents that he 21 intends to use at deposition would of necessity reveal counsel’s evaluation of which documents he 22 believes may be most useful with respect to these particular witnesses.” Id. at 5. On the other 23 hand, Apple submits that it “needs such documents and communications in advance of the 24 depositions in order to adequately prepare for cross-examination of the witness[es].” Id. at 2. First, 25 the court is persuaded by Apple’s suggestion that preparation for an effective cross-examination of 26 these witnesses would require Apple to have prior access to the documents and communications 27 that Plaintiff’s counsel intends to use in the course of those direct examinations. Without such 1 severely hamstrung to say the least. Furthermore, notwithstanding Neonode’s mislabeling of the 2 work product doctrine as a “privilege” – the court has already explained above that the doctrine is 3 one of qualified and limited immunity that may be overlooked and bypassed given the right set of 4 circumstances. As to those circumstances, Neonode would have to nevertheless produce such 5 documents “upon a showing that [Apple] has substantial need of the materials in the preparation of 6 the party’s case and that the party is unable without undue hardship to obtain the substantial 7 equivalent of the materials by other means.” See Fed. R. Civ. P. 26(b)(3). Given that Neonode 8 appears to be under a misapprehension that work product is an absolute privilege, when it is not – 9 and given that the court cannot undertake the Rule 26(b)(3) analysis in the abstract, Neonode’s 10 objections are once again presented in a wholesale and premature manner. To the extent that 11 Neonode wishes to lodge such an objection, the place to do so would be in a privilege log such 12 that if Apple wishes to challenge such a designation, that dispute can be brought to the court in a 13 manner that is amenable to an intelligent ruling (that is, one that would be based on an in camera 14 review of the document in question, and attended by full-throated briefing and/or argument 15 regarding the Rule 26(b)(3) factors). Accordingly, Neonode’s fourth argument is OVERRULED. 16 Lastly, Neonode’s fifth argument contends that “plaintiff has already produced all 17 documents provided to plaintiff by [Mr.] Goertz [], and Eriksson provided no documents to 18 plaintiff at any time prior to the execution of his consulting agreement [meaning that] [Apple’s] 19 continued pursuit of this issue is a waste of time and resources.” See Ltr. Br. (dkt. 90) at 5. This 20 statement overlooks several facts: (1) it does not address the documents that Neonode intends to 21 use during the Swedish depositions; (2) it does not address communications between Plaintiff’s 22 counsel and Messrs. Goertz and Eriksson; (3) it does not address documents provided by Mr. 23 Eriksson after the execution of his consulting agreement (some of which might conceivably not be 24 covered by the work-product doctrine at all, and others of which might need to be produced under 25 Rule 26(b)(3) notwithstanding the work product doctrine). As stated above, without a privilege log 26 and in camera review, and without being able to entertain focused and document-specific 27 arguments from the Parties about the Rule 26(b)(3) factors as to each challenged document, the 1 Neonode’s fifth objection is similarly OVERRULED. 2 Therefore, on or before 12:00 noon on May 4, 2022, Neonode is ORDERED to produce 3 (1) all documents Neonode Smartphone or its counsel has obtained from Messrs. Goertz or 4 || Eriksson, including the consulting agreement with Mr. Eriksson; (2) all communications between 5 Neonode Smartphone or its counsel and Messrs. Goertz or Eriksson; (3) all documents Neonode 6 || Smartphone may use at the depositions of Messrs. Goertz or Eriksson; and (4) to the extent 7 Neonode Smartphone intends to withhold any of the above-mentioned documents or 8 communications based on any assertion of privilege or the work product doctrine, Neonode shall 9 || prepare and produce a privilege log of all withheld documents and communications. 10 IT IS SO ORDERED. 11 Dated: April 29, 2022 a 12

13 ROBERT M. ILLMAN 14 United States Magistrate Judge 15 16

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