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Wi-Lan, Inc v. Lg Electronics

January 18, 2011

WI-LAN, INC., PLAINTIFF,
v.
LG ELECTRONICS, INC. AND LG ELECTRONICS, USA, INC., DEFENDANTS-COUNTERCLAIMANTS.



The opinion of the court was delivered by: Judge James B. Zagel

MEMORANDUM OPINION AND ORDER

I. BACKGROUND

This matter is before me because a subpoena was issued by the U.S. District Court for the Northern District of Illinois to two non-parties of a civil case. That case is now pending in the Southern District of New York. See Wi-Lan, Inc. v. LG Electronics, Inc., No. 10 CV 432 (S.D.N.Y. 2010). The non-parties, a non-profit advocacy group called the Coalition for Independent Ratings ("CFIR") and its founder and sole employee, Dominic Perri, are located in this District and were therefore served and commanded to appear for a deposition and produce documents here. The non-parties move to quash or modify the subpoenas and the Defendant moves to have them enforced, and to expedite ruling on the motions.

At the heart of the case is a licensing agreement related to a patent. The patent ("'402") , issued in 1996, concerns the parental television content control technology known as the V-Chip. In May of 2006, Defendant and Plaintiff entered into a non-exclusive licensing agreement over the '402 patent. That agreement has evidently broken down, as Wi-LAN is suing LG for fraudulently inducing Wi-LAN into entering the licensing agreement and for LG's alleged infringement of '402 by selling of products that incorporate the technology.

In response, LG offered fourteen affirmative defenses and added ten counterclaims. The issues LG seeks to explore via the non-parties, CFIR/Perri, include but are not limited to the defenses of patent misuse, unclean hands, and estoppel and the unenforceability, unfair competition, and New York deceptive acts and practices counterclaims. LG's overarching theory as to CFIR/Perri is that they were posing as an uninterested special interest group in front of various standard settings organization and governmental bodies (including Congress) but in fact were paid "shills" for Wi-LAN. More specifically, CFIR/Perri is alleged to have lobbied for interpretations of various rules and regulations that would make is easier for Wi-LAN to assert '402 and expand the scope of the licensing agreement.

CFIR/Perri counters with two points. First, they insist that they are not shills for WiLAN, rather the two simply have a "mutual interest in the promotion and use of independent ratings systems." This mutual interest prompted them to engage in "numerous discussions regarding the promotion of independent ratings systems and the range of mutually beneficial activities which could be undertaken" before the government and other standard-setting organizations. The implication is that there was nothing untoward about this arrangement and that the arrangement did not include "any interest or involvement in the business of Wi-LAN" on the part of CFIR or Perri.

Second, CFIR/Perri insists that even if somehow nefarious, the conduct alleged happened well after any time that would bear on LG's defenses and counterclaims. They claim that their contact with Wi-LAN did not occur until the summer of 2006 and that the last rule or standard relevant to '402 was in place by 2004. Further, the license agreement was not executed until May of 2006, also before CFIR/Perri had any contact with Wi-LAN.

LG claims that the connection between Wi-LAN and CFIR/Perri came to light very late in fact discovery, via a court-ordered document production that LG characterizes as a "dumping" of roughly 130,000 pages of documents. These documents had previously been withheld on the basis of privilege. Fact discovery was initially to have closed in early November of 2010, but based in part on this late production that deadline was extended to December 3rd. LG served CFIR/Perri on October 29, 2010 and commanded them to appear on November 5, 2010, with documents produced the day before.*fn1 CFIR/Perri refused to attend the deposition or produce documents, claiming that the time for compliance was unreasonably short, that it called exclusively for matters privileged under the attorney-client relationship and/or the Fifth Amendment, that the subject matter was irrelevant to the underlying case, and that in sum the subpoenas constituted an "undue burden" on them as non-parties. Counsel for the non-parties and counsel for LG traded some correspondence attempting to work out their differences, but they were unable to. The end result of all this was the pending motions, arguing in essence over these principal objections.

II. STANDARD OF REVIEW

Rule 45 governs subpoenas. It states in relevant part that: "[o]n timely motion, the issuing court must quash or modify a subpoena that: (i) fails to allow a reasonable time to comply; . . . (iii) requires disclosure of privileged or other protected matter, if no exception or waiver applies; or (iv) subjects a person to undue burden." Fed. R. Civ. P. 45(c)(3)(A). It is left to the discretion of the issuing district court whether or not to grant, deny, or modify a motion to quash a subpoena. See Griffin v. Foley, 542 F.3d 209, 223 (7th Cir. 2008).

The non-party opposing the subpoena must establish that it is unduly burdensome. In analyzing the claim of undue burden, the Seventh Circuit has established a relative hardship test. See Northwestern Memorial Hosp. v. Ashcroft, 362 F.3d 923, 927 (7th Cir 2004). Factors to be weighed in the analysis include "relevance, the need of the party for the documents, the breadth of the document request, the time period covered by it, the particularity with which the documents are requested, and the burden imposed." See Morrow v. Air Ride Technologies, Inc. 2006 U.S. Dist. LEXIS 96651 at *2 (S.D. Ind. Mar. 6, 2006). The fact that the subpoenaed party is a non-party is also in the balance. Id.

Under Rule 26, matters being sought must be relevant to a claim or defense, but "[r]elevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence." Fed. R. Civ. P. 26(b)(1). For this reason, "[r]elevancy 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 (1978) (citing Hickman v. Taylor, 329 U.S. 495, 501 (1947)).

III. DISCUSSION

There are two small threshold matters that bear discussion. The first relates to Wi-LAN's submissions. The principal motion before me is a motion to quash made by the non-parties, CFIR and Perri, to the Defendant in the main case, LG Electronics. That leaves Plaintiff, WiLAN, on the outside looking in with respect to this specific motion. Frequently in such circumstances, however, the nominally uninvolved party makes a claim of right or privilege with respect to documents or topics for deposition. That, or they simply remain silent. Not so here. In this case, Wi-LAN has filed a brief billed as a "Response" to these motions, but ...


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