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finding undue intrusion where a request is "not narrowly tailored, request confidential information, and appear to be a broad fishing expedition for irrelevant information."
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Case No. 16-mc-80048-MEJ
03-24-2016
IN RE: EX PARTE APPLICATION VARIAN MEDICAL SYSTEMS INTERNATIONAL AG, Applicant.
ORDER GRANTING EX PARTE APPLICATION UNDER 28 U.S.C. § 1782 FOR DISCOVERY FOR USE IN A FOREIGN PROCEEDING Re: Dkt. No. 1
INTRODUCTION
Varian Medical Systems International AG ("Varian") filed this ex parte Application for an order pursuant to 28 U.S.C. § 1782 for discovery from a local corporation, IMPAC Medical Systems, Inc. ("IMPAC"), for its use in a foreign proceeding. Appl., Dkt. No. 1. Having considered Varian's arguments, supporting evidence, and the relevant legal authority, the Court GRANTS Varian's Application for the reasons set forth below.
BACKGROUND
Varian filed a patent infringement action in the District Court in Mannheim, Germany against Elekta AB, Elekta GmbH, and Elekta Ltd. (collectively "Elekta"). Appl. at 1-2; Declaration of Yury Kapgan ("Kapgan Decl.") ¶¶ 3-4, Dkt. No. 2. The German proceedings concern, at least in part, the design and operation of Elekta's treatment planning software known as "Monaco," which allows medical professionals to develop and optimize cancer treatment plans. Kapgan Decl. ¶ 5; Appl. at 2. Elekta sells Monaco in Germany and, as alleged by Varian, has infringed on Varian's European patents through such sales. Kapgan Decl. ¶ 6.
IMPAC—a wholly-owned subsidiary of Elekta Holdings U.S., which in turn is a wholly-owned subsidiary of Elekta AB—is the entity responsible for developing and manufacturing Monaco software. Id. ¶¶ 7, 8. IMPAC's principal place of business is in Sunnyvale, California. Id. ¶ 7; Ex. 1 (print outs from Elekta's website, https://www.elekta.com/company/#our-offices).
Varian seeks copies of IMPAC's requirement specifications and design specifications for Monaco, versions 2.0 and later, which it states are a "subset of technical documents describing Elekta's software functionality). Appl. at 1. According to Varian, this information is directly relevant to disputed issues in the foreign proceeding, is in the possession of IMPAC in this District, and cannot be obtained in the German action. Id.; Kapgan Decl. ¶ 8. Varian explains that in the German proceeding Elekta contends Varian's allegations are based on a description of the Monaco software that "is imprecise and mixes up different definitions as all as the two stages of the optimization process at issue[.]" Appl. at 2 (quoting In re: Varian Med. Sys. Int'l AG v. Elekta AB, et al., 70 195/15, Elekta's Statement of Defence (translation) at 18-19, Feb. 11, 2016). Accordingly, Varian seeks the requirement and design specifications of Monaco that it contents are "directly relevant to Elekta's contention that Varian has somehow mischaracterized the relevant features of the Monaco software in that action." Id. Varian contends that "German courts are receptive to the type of discovery sought by Varian" and its request "is not made to circumvent any limitation on discovery imposed by German courts." Id. at 3.
Varian submits a copy of its proposed subpoena as Exhibit B to the Application. See id., Ex. B. The subpoena contains two Requests for Production:
Request No. 1. All requirement specifications and design specification for the "Monaco" treatment planning software, version 2.0 and later.Id.
Request No. 2. All requirement specifications and design specifications that support Elekta AB, Elekta GmbH, and Elekta Ltd.'s contention in the Statement of Defence that Varian has mischaracterized the relevant features of the Monaco software in In re: Varian Medical Systems International AG v. Elekta AB, et al., 70 195/15.
LEGAL STANDARDS
A. Discovery Pursuant to 28 U.S.C. § 1782
"Section 1782 is the product of congressional efforts, over the span of nearly 150 years, to provide federal-court assistance in gathering evidence for use in foreign tribunals." Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 247 (2004). Section 1782 provides in part:
The district court of the district in which a person resides or is found may order him to give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or international tribunal. . . . The order may be made . . . upon the application of any interested person and may direct that the testimony or statement may be given, or the document or other thing be produced, before a person appointed by the court.28 U.S.C. § 1782(a). The statute thus outlines a three part test in deciding whether to grant a § 1782 application: "(1) the discovery sought is from a person residing in the district court to which the application is made; (2) the discovery is for use in a proceeding before a foreign tribunal; and (3) the applicant is a foreign or international tribunal or an 'interested person.'" In re Ex Parte Apple Inc., 2012 WL 1570043, at *1 (N.D. Cal. May 2, 2012) (quotation omitted). As soon as the three statutory requirements have been met, "a district court is free to grant discovery in its discretion." Schmitz v. Bernstein Liebhard & Lifshitz, LLP, 376 F.3d 79, 83-84 (2d Cir. 2004) (quotation omitted).
But "[a] district court is not required to grant the application" and "instead retains discretion to determine what discovery, if any, should be permitted." Cryolife, Inc. v. Tenaxis, Inc., 2009 WL 88348, at *1 (N.D. Cal. Jan. 13, 2009) (citing Intel Corp., 542 U.S. at 264). The Supreme Court provided several non-exclusive factors (the "Intel factors") for district courts to consider in exercising their discretion:
(1) whether the "person from whom discovery is sought is a participant in the foreign proceeding"; (2) "the nature of the foreign tribunal, the character of the proceedings underway abroad, and the receptivity of the foreign government, or the court or agency abroad to U.S. federal-court judicial assistance"; (3) whether the discovery request is an "attempt to circumvent proof-gathering restrictions or other policies of a foreign country or the United States"; and (4) whether the discovery is "unduly intrusive or burdensome."In re Apple Inc., 2012 WL 1570043, at *1 (quoting Intel Corp., 542 U.S. at 264-65). District courts utilize their discretion keeping in mind the "twin aims" of § 1782: "'providing efficient assistance to participants in international litigation and encouraging foreign countries by example to provide similar assistance to our courts.'" Intel Corp., 542 U.S. at 252 (quotation omitted). B. Ex Parte Filing of Application
In general, ex parte requests are disfavored and mostly limited to emergency situations because such requests disrupt and undermine the adversarial system on which the Court generally operates. In re Judicial Assistance Pursuant to U.S.C. Sec. 1782 ex rel. Macquarie Bank Ltd. (Macquarie Bank I), 2014 WL 7706908, at *1 (D. Nev. June 4, 2014); In re Intermagnetics Am., Inc., 101 B.R. 191, 192-93 (C.D. Cal. 1989). Nonetheless, § 1782 petitions are regularly reviewed on an ex parte basis. See Macquarie Bank I, 2014 WL 7706908, at *1; In re Republic of Ecuador, 2010 WL 3702427, *2 (N.D. Cal. Sept. 15, 2010). Consequently, orders granting § 1782 applications typically only provide that discovery is "authorized," and thus the opposing party may still raise objections and exercise its due process rights by challenging the discovery after it is issued via a motion to quash, which mitigates concerns regarding any unfairness of granting the application ex parte. See Macquarie Bank I, 2014 WL 7706908, at *1 (citing In re Letters Rogatory from Tokyo Dist., Tokyo, Japan, 539 F.2d 1216, 1219 (9th Cir. 1976)); IPCom GMBH & Co. KG v. Apple Inc., 61 F. Supp. 3d 919, 922 (N.D. Cal. 2014) ("It is common for parties to file ex parte applications, as parties will be given adequate notice of any discovery taken pursuant to the request and will then have the opportunity to move to quash the discovery or to participate in it." (footnote and quotation omitted)).
DISCUSSION
In determining whether to grant Varian's Application, the Court considers first, the three part test under § 1782, and second, the four Intel factors.
A. 28 U.S.C. § 1782's Three Threshold Requirements
Varian meets § 1782's threshold three part test. First, "the discovery sought is from a person residing in the district court to which the application is made" because Varian seeks discovery from IMPAC, which is principally located in Sunnyvale, California within this Court's jurisdiction in the Northern District of California. Second, "the discovery is for use in a proceeding before a foreign tribunal" because Varian seeks to use the discovery it seeks from IMPAC to support its patent claims in In re: Varian Medical Systems International AG v. Elekta AB, et al., 70 195/15, which is before the Mannheim District Court in Germany. Third, and finally, Varian qualifies as an "interested person" because it is a participant in the foreign proceeding. See Intel Corp., 542 U.S. at 256. Accordingly, Varian successfully meets the statutory requirements of § 1782's three part test. B. Intel Factors
Even after finding that § 1782's three part test has been met, the Court nonetheless retains discretion to decide what discovery, if any, should be permitted. The four Intel factors assist the Court in making this determination.
1. Whether the Material is Within the Foreign Tribunal's Jurisdictional Reach
The first Intel factor is whether "the person from whom discovery is sought is a participant in the foreign proceeding[,]" because "the need for § 1782(a) aid generally is not as apparent as it ordinarily is when evidence is sought from a nonparticipant in the matter arising abroad." Id. at 264. This is because "[a] foreign tribunal has jurisdiction over those appearing before it, and can itself order them to produce evidence[,]" where "[i]n contrast, nonparticipants . . . may be outside the foreign tribunal's jurisdictional reach; hence, their evidence, available in the United States, may be unobtainable absent § 1782(a) aid." Id.
One court has recently recognized that "[a]lthough the case law at times refers to whether the 'person' is within the foreign tribunal's jurisdictional reach, the key issue is whether the material is obtainable through the foreign proceeding." In re Judicial Assistance Pursuant to 28 U .S.C. 1782 by Macquarie Bank Ltd. (Macquarie Bank II), 2015 WL 3439103, at *6 (D. Nev. May 28, 2015), reconsideration denied sub nom. Matter of A Petition for Judicial Assistance Pursuant to 28 U .S.C. § 1782 by Macquarie Bank Ltd., 2015 WL 7258483 (D. Nev. Nov. 17, 2015) (citing In re Appl. of Ooo Promnefstroy, 2009 WL 3335608, *5 (S.D.N.Y. Oct. 15, 2009) ("it is the foreign tribunal's ability to control the evidence and order production, not the nominal target of the § 1782 application, on which the district court should focus"); In re Microsoft Corp., 428 F. Supp. 2d 188, 194 (S.D.N.Y. 2006) ("The relevant inquiry is whether the evidence is available to the foreign tribunal"); In re Ex Parte LG Elecs. Deutschland GmbH, 2012 WL 1836283, *2 (S.D. Cal. May 21, 2012) (finding this factor weighed against allowing § 1782 discovery even though subpoena was directed to a non-party to the foreign proceeding because the information sought could be obtained from a party to the foreign proceeding)); see also In re Ex Parte Appl. of Qualcomm Inc. (Qualcomm), 2016 WL 641700, at *7 (N.D. Cal. Feb. 18, 2016) (indicating courts should properly "focus on whether the evidence 'is available to the foreign tribunal,' because in some circumstances, evidence may be available to a foreign tribunal even if it is held by a non-participant to the tribunal's proceedings.").
Consequently, the first Intel factor "militates against allowing § 1782 discovery when the petitioner effectively seeks discovery from a participant in the foreign tribunal even though it is seeking discovery from a related, but technically distinct entity." Id. (citing Schmitz v. Bernstein Liebhard & Lifshitz, LLP., 376 F.3d 79, 85 (2d Cir. 2004) ("Although technically the respondent in the district was [the foreign counter-party's law firm], for all intents and purposes petitioners are seeking discovery from DT, their opponent in the German litigation"); In re Kreke Immobilien KG, 2013 WL 5966916, *5 (S.D.N.Y. Nov. 8, 2013) (denying discovery sought from parent company under § 1782 when subsidiary company was participant in foreign proceeding because, inter alia, "the notion that [the parent company] could somehow be a nonparticipant in the foreign action is untenable")); but see In re Appl. for an Order for Judicial Assistance in a Foreign Proceeding in the Labor Court of Brazil, 466 F. Supp. 2d 1020, 1031 (N.D. Ill. 2006) (finding first Intel factor weighed in favor of granting § 1782 application when applicants sought discovery from McDonald's but its wholly-owned subsidiary, McCal, was the party in the foreign proceeding, noting, "McDonald's and McCal are two separate legal entities and McDonald's is merely the shareholder of McCal."); Norex Petroleum Ltd. v. Chubb Ins. Co. of Can., 384 F. Supp. 2d 45 (D.D.C. 2005) (holding that the court cannot require a wholly-owned American subsidiary to force its foreign parent corporation to submit to discovery).
Thus while IMPAC is not itself a participant in the foreign proceeding at issue here, the fact that its parent company, Elekta AB, is, suggests against finding that this factor weighs in favor of granting the application. Unlike the cases above where a subsidiary is asked to obtain information from a parent company, if the German court were to order discovery from Elekta AB, it would be the parent company asking for information from a subsidiary. Under such circumstances, the Court is inclined to agree with the Macquarie Bank II court that such a relationship tends to advise against § 1782 discovery. Varian argues, however, that the "German courts have very limited ability to order the production of documents[,]" and "German courts do not allow for nearly the same type of discovery allowed for in the United States." Appl. at 9 (citing Heraeus Kulzer, GmbH v. Biomet, Inc., 633 F.3d 591, 597 (7th Cir. 2011) (acknowledging that a German litigant "cannot obtain even remotely comparable discovery by utilizing German procedures"; additional citations omitted). As it is unclear whether the Mannheim court can in fact order the discovery Varian seeks, the Court is inclined to find that this first Intel factor is no more than neutral. See Qualcomm, 2016 WL 641700, at *7 (first Intel factor neutral when it was unclear foreign tribunal could obtain discovery sought).
2. The Foreign Tribunal
The second Intel factor asks courts to consider "the nature of the foreign tribunal, the character of the proceedings underway abroad, and the receptivity of the foreign government or the court or agency abroad to U.S. federal-court judicial assistance." Intel Corp., 542 U.S. at 264. This factor focuses on whether the foreign tribunal is willing to consider the information sought. See Siemens A.G. v. W. Digital Corp., 2013 WL 5947973, *3 (C.D. Cal. Nov. 4, 2013) (citing Schmitz, 376 F.3d at 884). "[I]f there is reliable evidence that the foreign tribunal would not make any use of the requested material, it may be irresponsible for the district court to order discovery, especially where it involves substantial costs to the parties involved." In re Babcock Borsig AG, 583 F. Supp. 2d 233, 241 (D. Mass. 2008).
There is no evidence or case law suggesting that the Mannheim District Court would be unreceptive to the discovery Varian seeks. See Cryolife, Inc., 2009 WL 88348, at *3 (finding "no basis to conclude that the German court would be unreceptive to the information requested"); accord Heraeus Kulzer, GmbH, 633 F.3d at 597 ("[T]here is nothing to suggest that the German court would be affronted by [the applicant's] recourse to U.S. discovery or would refuse to admit any evidence, or at least any probative evidence (German judges can disregard evidence that would waste the court's time), that the discovery produced."). "In the absence of authoritative proof that a foreign tribunal would reject evidence obtained with the aid of section 1782," courts tend to "err on the side of permitting discovery. " In re Kreke Immobilien KG, 2013 WL 5966916, at *5 (quotation omitted); cf. Schmitz, 376 F.3d at 84 (denying discovery where "faced with specific requests from the German Ministry of Justice and the Bonn Prosecutor to deny petitioners the discovery they sought" because of concerns that granting discovery would jeopardize the ongoing German criminal investigation and "jeopardize German sovereign rights."). Accordingly, the Court finds this factor weighs in favor of § 1782 discovery.
3. Attempt to Circumvent Foreign-Proof Gathering Restrictions and Policies
The third Intel factor asks whether the discovery request is an "attempt to circumvent proof-gathering restrictions or other policies of a foreign country or the United States." Intel Corp., 542 U.S. at 264-65. "A perception that an applicant has 'side-stepped' less-than-favorable discovery rules by resorting immediately to § 1782 can be a factor in a court's analysis." In re Cathode Ray Tube (CRT) Antitrust Litig., 2013 WL 183944, at *3 (N.D. Cal. Jan. 17, 2013) (citing In re Appl. of Caratube Int'l Oil Co., 730 F. Supp. 2d 101, 107-08 (D.D.C. 2010)). "Put differently, the § 1782 applicant's conduct in the foreign forum is not irrelevant." In re Appl. of Gilead Pharmasset LLC, 2015 WL 1903957, at *4 (D. Del. Apr. 14, 2015) (quoting In re IPC Do Nordeste, LTDA, 2012 WL 4448886, *9 (E.D. Mich. Sept. 25, 2012)).
This Court does not have any reason to believe that Varian's discovery request is an attempt to undermine the Mannheim District Court or its policies or proof-gathering restrictions. According to Varian, it is "unaware of any restrictions imposed by German courts in proof-gathering procedures that would prohibit it from obtaining and introducing the discovery it seeks through Section 1782[.]" Appl. at 7. Thus, while Varian provided little information about what efforts it has made to obtain the information it seeks through the Mannheim District Court, at this time, the Court finds this factor weighs in favor of granting Varian's application.
4. Undue Intrusion or Burden
The final discretionary factor is whether the discovery requested is "unduly intrusive or burdensome." Intel Corp., 542 U.S. at 265. The proper scope of discovery arising out of a § 1782 application is generally determined by the Federal Rules of Civil Procedure. See, e.g., Gov't of Ghana v. ProEnergy Servs., LLC, 677 F.3d 340, 343 (8th Cir. 2012); see also In re Letters Rogatory From Tokyo Dist. Prosecutor's Office, 16 F.3d 1016, 1019 (9th Cir. 1994) (unless the court order otherwise specifies, the Federal Rules of Civil Procedure apply). Following the December 1, 2015 Amendments to the Federal Rules of Civil Procedure, requests must be "proportional" "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). Typically, requests become "unduly intrusive and burdensome where they are not narrowly tailored, request confidential information and appear to be a broad 'fishing expedition' for irrelevant information." Qualcomm, 2016 WL 641700, at *9. The Supreme Court has recognized that "unduly intrusive or burdensome requests may be rejected or trimmed." Intel, 542 U.S. at 265.
Varian argues its request for the design specifications and requirement specifications of the Monaco software versions 2.0 and later seeks highly relevant information and is narrowly tailored and minimally burdensome to IMPAC. Appl. at 5, 8-9. It explains that in the foreign proceeding, Elekta contends it does not infringe Varian's patents and that Varian's allegations are based on a mischaracterization of the relevant features of the Monaco software. Id. at 5. As such, Varian contends the discovery it seeks will support its infringement allegations and rebut Elekta's claims. Id. It further contends that "the universe of responsive documents is small and easily searchable, and Elekta could produce these documents to Varian with minimal effort." Id. at 8.
From Varian's proffers, the Court is satisfied that the information it seeks is relevant and that its request—composed of two discrete Requests for Production for a limited number of versions of the Monaco software—is narrowly tailored. Although the data Varian seeks likely contains Elekta/IMPAC's sensitive information, the Court does not have enough evidence at this time to conclude that Varian's request is unduly intrusive. If IMPAC seeks to challenge the intrusiveness of this request—or for that matter the relevance, breadth, or burdensomeness of Varian's request for documents—the Court's ruling does not preclude it from bringing a motion to quash or modify the subpoena. Additionally, the Court is willing to consider proposed protective orders to prevent the misuse of this information. In any event, under the current circumstances, the Court finds this fourth Intel factor weighs in favor of Varian's request.
CONCLUSION
In light of the foregoing analysis, the Court finds that Varian meets § 1782's statutory requirements and concludes that the Intel factors generally weigh in favor of granting Varian's Application. Accordingly, the Court exercises its discretion and GRANTS Varian's § 1782 Application. Varian may serve the subpoena attached to its Application (Appl., Ex. B) without prejudice to any motion to quash that IMPAC or any other appropriate party may wish to file.
IT IS SO ORDERED. Dated: March 24, 2016
/s/_________
MARIA-ELENA JAMES
United States Magistrate Judge