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Papst Licensing GmbH & Co. KG v. Apple, Inc.

United States District Court, N.D. Illinois, Eastern Division

April 4, 2017

PAPST LICENSING GmbH & Co. KG, Plaintiff,
APPLE, INC., and Defendant PAPST LICENSING GmbH & Co. KG, Plaintiff,

          Elaine Bucklo Judge


          Jeffrey Cole Magistrate Judge

         Jerold Schnayer has moved to quash deposition subpoenas from Apple and LG Electronics, which are currently defendants in a suit brought by Papst Licensing in the Eastern District of Texas. There, Papst charges the defendants with infringement of five patents. Mr. Schnayer is an attorney who used to represent Papst in various patent law matters. Although he is not involved in the Texas case and hasn't been involved with Papst for over three years, he doesn't think he should have to sit for a deposition. The issue presented by this case is a recurring one. Yet, “[a]s common as attempts to depose opposing counsel are in all types of cases, they are particularly frequent in patent litigation.” Douglas R. Richmond, Depositions of Other Lawyers, 81 Tenn. L. Rev. 47, 73 (2013). With all deference, under the circumstances, the motion must be denied.


         Mr. Schnayer, Papst, and Apple

         While representing Papst nearly ten years ago, Mr. Schnayer sent a letter to Apple's then CEO, Steve Jobs, and accused Apple of infringing the U.S. Patents Nos. 6, 470, 399 (“399 patent), 6, 895, 449 (“449 patent”), and European Patent No. 0 917 682 (“the '682 patent”). [Dkt. #11-2]. For three years following that letter, Mr. Schnayer went back and forth with Apple over the allegations, and attempted to get Apple to license the patents. Apple refused, and the communications ended in early 2010. It wasn't until November 2015 that Apple heard from Papst again, when it filed suit in the Texas federal court. During discovery in the case, Apple provided a deposition witness on the topic of the communication, and Papst has noticed the deposition of Apple's in-house counsel, who was involved in those discussions. Apple, quite naturally, is following the same course and, in addition to deposing Papst's 30(b)(6) witness, wants to depose Mr. Schnayer, who was Papst's in-house counsel during the communications. We are told that there is no other source for the requested information, as Mr. Schnayer was the main participant in the discussions.

         Mr. Schnayer, Papst, and LG Electronics

         Papst acquired the family of patents asserted in the Texas lawsuit in early 2006 from Labortechnik Tasler GmbH. At that time, two of the patents asserted against LG had already been granted. The other three patents asserted against LG were filed in August 2006 and September 2010 - during Mr. Schnayer's representation of Papst. So, Mr. Schnayer served as Papst's counsel during the acquisition of the asserted patents, communicating with Labortechnik Tasler GmbH and third party patent broker, PATEV GmbH & Co. KG, during Papst's licensing negotiations with third parties, including LG Electronics, and during Papst's filing and prosecution of the later-filed patent applications. As such, Mr. Schnayer communicated with a number of third parties during acquisition and licensing of the patents, asking him the source for any discovery regarding those communications. He was also involved in the prosecution of the patents. In the Texas litigation, LG has alleged, amongst other defenses, that the asserted patents are unenforceable due to the failure to disclose material prior art to the U.S. Patent & Trademark Office (“PTO”) during the prosecution of those patents. So, again, Mr. Schnayer is the source of information for what was known during the prosecution. Significantly, another possible source for information on acquisition, licensing, and prosecution, George Papst, founder of the company, passed away in 2012.

         Mr. Schnayer, Apple, LG Electronics, and the Subpoenas

         Apple served the subpoena on Mr. Schnayer and provided the requisite witness fee at his residence in Glencoe, Illinois on January 27, 2017, noticing the deposition for March 3, 2017 in Chicago, with a request that relevant documents be produced some two weeks earlier on February 14. [Dkt. ##11-19, 11-20]. On February 7, 2017, Mr. Schnayer emailed Apple's counsel stating that he had not represented Papst in over three years, had never been involved in the Texas litigation, and didn't have any idea what it was about. He asked that the subpoena be withdrawn and demanded that Apple provide him voluminous documents, including “all the pleadings in the law suit, and copies of all transcript [sic] that in any way concern my potential deposition” and “any and all communications (as that term is defined in the subpoena and its attachments) that in any way concern the potential and/or actual taking of my deposition.” He also asked for an extension of time to object and to “file any motions relating to the subpoena.” Id. Moreover, he stated: “I am traveling overseas until this coming Sunday and I have not had time to contact my attorney who is unavailable.” Id. He demanded a response in two days. [Dkt. #11-21].

         Apple responded on February 9, writing that it didn't agree with many of Mr. Schnayer's demands. It pointed out that the subpoena clearly said the litigation was about several patents acquired by Papst from Labortechnik Tasler and explained the relevance of the requested documents. More, of course, could be learned by looking the case up on PACER. Apple offered a one-week extension for producing responsive documents subject to Mr. Schnayer's confirmation that he would comply with the subpoena. Apple also offered to postpone the deposition to a date in mid-March that would be convenient for both sides. [Dkt. #11-22].

         Mr. Schnayer emailed Apple back that same day, complaining that “[i]t is unreasonable for you to put any restrictions on your offer for an extension of time. I do not appreciate your lack of cooperation.” He said he was still out of the country and had not reached his attorney - although it was he that demanded a response in two days. [Dkt. #11-23]. Apple then asked: “For purposes of considering your extension request, when can you reasonably commit to producing responsive documents?” [Dkt. #11-24]. Mr. Schnayer responded the next morning - February 10 - by serving objections to the subpoena accompanied by an email in which he stated, “I plan to file a motion for a protective order in due course if necessary.” [Dkt. #11-25].[2]

         On February 21 and 22, Apple's counsel emailed Mr. Schnayer asking when he was available for a meeting to discuss his objections. [Dkt. #11-26]. On February 23, Mr. Schnayer's attorney emailed Apple and LG Electronics' counsel to request a teleconference to discuss “whether we can resolve this without intervention by the court.” [Dkt. #11-27]. Apple provided its availability for a call and also asked whether Mr. Schnayer would even agree to be deposed. [Dkt. #11-27]. On February 24, Mr. Applegate, counsel for Mr. Schnayer, responded that Mr. Schnayer's willingness to be deposed “depend[s] on what agreements we may be able to reach concerning the scheduling and scope of both the deposition and the requested document production[.]” [Dkt. #11-27].

         On February 27, Mr. Applegate conferred with counsel for Apple and LG regarding the scope of the subpoena. In a follow up email that day, Apple summarized the discussion and reiterated that it would not pursue the document requests if Mr. Schnayer confirmed that he had already provided to Papst all relevant case files at the conclusion of his representation of the company. [Dkt. #11-27]. Apple's counsel also asked Mr. Applegate to provide dates for Mr. Schnayer's deposition availability based on statements during the call that Mr. Schnayer would be out of the country again for a week in early March. [Dkt. #11-27]. On March 1, Mr. Applegate wrote to tell the parties that “Mr. Schnayer [wa]s agreeable to proceeding with the deposition only if the scope of Mr. Schnayer's deposition is strictly limited to the content of communications that he had with representatives of third party companies concerning the potential licensing of the '399 and/or '449 patents.” [Dkt. #11-27]. On March 2, LG Electronic's counsel responded by raising concerns about what it deemed the narrow scope of the subject matter arguably allowed under Mr. Applegate's proposal and explained why a broader set of topics was necessary. [Dkt. #11-27].

         On March 3, Mr. Applegate offered March 17 for the deposition, but once again wanted the subject matter restricted: “the deposition will be limited to the topic of Mr. Schnayer's knowledge of Papst's efforts to license to others the '399 and '449 patents that is not subject to work product or attorney-client privilege; i.e., the content of communications that he had with representatives of third party companies concerning the potential licensing of the ‘399 and/or ‘449 patents[.]” [Dkt. #11-28]. On March 6, LG Electronics' counsel proposed the subject matter scope as follows: “the Tasler patents and related applications-subject to limited background information as to the relationship between Mr. Schnayer and Papst Licensing; to agree that you, on Mr. Schnayer's behalf, may raise privilege objections and instruct not to answer on that basis-subject to later ...

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