United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
JEFFREY COLE, Magistrate Judge.
Continental Automotive Systems US, Inc. ("Continental") has sued Schrader Electronics, Inc. in the Eastern District of Michigan for patent infringement. Automotive Systems US, Inc. v. Schrader Electronics, Inc., et al., No. 2:11-cv-14525 (E.D. Mich.). The patent at issue involves a sensor manufactured by Schrader that measures tire pressure and sends that information to a receiver in the vehicle. The receiver is manufactured by Continental, Omron and others. In the wake of the district court's Markman ruling, Continental issued a Rule 45 subpoena to Omron, an innocent, non-party to the patent action. Omron is a direct competitor of Continental.
The information that Continental seeks encompasses a wide variety of technical, proprietary information - specifically, technical specifications pertaining to how Omron's receivers process the information they receive from tire pressure sensors. Simply stated, the subpoena calls for the production of all "technical documents" "related to all of Omron's [tire pressure monitoring] receivers." ( Continental Memorandum at 8) The subpoena also sought a witness to testify at a deposition regarding the operation of the receivers and the documents to be produced should that prove to be necessary. Not surprisingly, Omron is unwilling to divulge this information to Continental, which, according to Omron, is its number one competitor in the industry. Expressing surprise at Omron's unwillingness to share its most valuable corporate asset with a competitor, Continental filed the instant motion to compel.
Continental submits that the information it seeks is "indisputably relevant" to its patent infringement claim against Schrader because "at least the 019 patent contains claims that implicate functionality which may be executed by the... receiver or related components (as opposed to the sensor itself)." ( Continental Memorandum at 5). The Memorandum does not go beyond this ipse dixit and cites nothing in support of it. Indeed, only one case is cited in the Memorandum, Purzel Video GmbH v. Does 1-108, 2013 WL 6797364, 9 (N.D.Ill.2013), and that for the general proposition that the mere burden of finding and producing documents is not considered undue. ( Memorandum at 8). Apart from the fact that "general propositions do not decide concrete cases, " Lochner v. New York, 198 U.S. 45, 76 (1905)(Holmes, J., dissenting), relevancy, not burden, is the focus of Omron's objection to the subpoena.
Omron contends that Judge Murphy's claim construction ruling "eviscerated" Continental's claim for direct patent infringement against Schrader because a tire pressure monitor sensor located in a car wheel cannot generate an alarm detectable by human beings, as the patent requires. ( Memorandum at 1-2, 7 et. seq. ). Consequently, Omron argues, Schrader could not be a direct infringer, and absent direct infringement there cannot be indirect patent infringement. ( Memorandum at 8). Proceeding from this premise, Omron concludes that since the claims against Schrader "cannot be proven as a matter of law, " the information sought by Continental is simply not relevant. ( Memorandum at 10).
At the hearing on its motion, Continental disagreed with Omron's interpretation of Judge Murphy's Markman ruling and Omron's bleak assessment of the continued viability of its patent infringement claim, which is now based on the theory that everyone who drives a car containing an Omron receiver and a Schrader tire pressure sensor is a direct infringer and Schrader is a contributory infringer. Omron's Memorandum contains an extended discussion of direct and indirect patent infringement and of the Michigan court's rulings. It cites a number of patent cases, including the Supreme Court's June 2, 2014 decision in Limelight Network is, Inc. v. Akamai Technologies Inc. ( Memorandum, Ex. 10).
Continental conceded, as candor required, that if Omron's interpretation of patent law was correct that it would have no case, and any information sought from Omron would obviously then be irrelevant. And in that setting, the burden of compliance with Continental's subpoena would obviously exceed the benefit of production of the material sought. Nw. Mem'l Hosp. v. Ashcroft, 362 F.3d 923, 927 (7th Cir.2004). But Continental had a very different interpretation of Limelight Network is, Inc. and of the theory of indirect patent infringement.
What the oral argument showed was that a determination of whether Continental is entitled to the discovery it seeks from Omron - that is, whether it is relevant to a claim or defense in the Michigan litigation - is inextricably bound up with the merits of that litigation. Cf., Truswal Systems Corp. v. Hydro-Air Engineering, Inc., 813 F.2d 1207, 1212 (Fed. Cir.1987)("a determination of relevance implicates the substantive law of patent validity and infringement.").
Under Fed.R.Civ.P. 45(f), an enforcing court may transfer a motion to the issuing court if the enforcing court finds there are "exceptional circumstances." The Advisory Committee note to Rule 45(f) provides guidance on what might constitute such circumstances:
The prime concern should be avoiding burdens on local nonparties subject to subpoenas, and it should not be assumed that the issuing court is in a superior position to resolve subpoena-related motions. In some circumstances, however, transfer may be warranted in order to avoid disrupting the issuing court's management of the underlying litigation, as when the court has already ruled on issues presented by the motion or the same issues are likely to rise in discovery in many districts. Transfer is appropriate only if such interests outweigh the interests of the nonparty served with the subpoena in obtaining local resolution of the motion.
Delving into the merits of the litigation in the Eastern District of Michigan constitutes disrupting that court's management of the underlying litigation. A ruling here may turn out to be inconsistent with the rulings in the Michigan case. See Wultz v. Bank of China, Ltd., 2014 WL 2257296 (D.D.C. 2014); Chem-Aqua, Inc. v. Nalco Co., 2014 WL 2645999 (N.D.Tex. 2014); FTC v. A Fin. Ctr., LLC, 2013 WL 6388539 (S.D.Ohio 2013). In this case, ordering compliance with Continental's subpoena involves far more than merely ordering discovery of matters that are connected perhaps only loosely to the case, pending elsewhere. Generally, in that context, courts must be "especially hesitant to pass judgment on what constitutes relevant evidence." Truswal Systems Corp. v. Hydro-Air Eng'g, Inc., 813 F.2d 1207, 1212 (Fed.Cir.1987). Rather, it would involve determining a question that lies at the heart of the Michigan litigation - namely whether Continental even has a viable patent case against Schrader after the Markman ruling. Accordingly, this matter is transferred to the issuing court for resolution.
If this issue were not present, I would deny Continental's motion. Rule 45 contains important provisions to protect the recipient of a subpoena from undue burden or expense, invasion of a privilege, or disclosure of protected material. S.E.C. v. Hyatt, 621 F.3d 687, 694 (7th Cir. 2010). Under Rule 45(d)(3)(A)(iii), a court must quash a subpoena that requires disclosure of protected information. One can imagine no more harmful type of disclosure of technical information of the type sought here than to a direct competitor. It's a blatantly obvious point. See Am. Standard Inc. v. Pfizer Inc., 828 F.2d 734, 741 (Fed.Cir. 1987)(courts presume that disclosure to a competitor is more harmful than disclosure to a non-competitor); Albany Molecular Research, Inc. v. Schloemer, 274 F.R.D. 22, 25 ...