Zecotek Discovery Hearing

UNITED STATES DISTRICT COURTNORTHERN DISTRICT OF OHIO

EASTERN DIVISION

ZECOTECH IMAGING SYSTEMS, ) CASE No.: 5:12CV1533PTE. LTD., et al., )

)Plaintiffs, ) JUDGE SARA LIOI

) Magistrate Judge George J. Limbertv. )

)SAINT-GOBAIN CERAMICS & ) ORDERPLASTICS INC., et al., )

)Defendants. )

On October 16, 2013, Plaintiffs, Zecotech Imaging Systems PTE Ltd. and Beijing Opto-

Electronics Technology Co., filed a Notice of Discovery Dispute. ECF Dkt. #136. On October 23,

2013, the discovery dispute was referred to the undersigned for resolution. Following letter briefing

by the parties, See ECF Dkt. ##140, 141, and 142, a telephonic status conference was conducted on

November 8, 2013. According to the letter briefs filed by Defendants, Saint-Gobain Ceramics &

Plastics Inc. (“Saint-Gobain”), and Philips Healthcare Informatics Inc. d/b/a Philips Healthcare and

Philips Medical Systems (Cleveland), Inc. (“the Philips defendants”), the parties had not met and

conferred in an effort to resolve the discovery disputes before the Notice of Discovery Dispute was

filed. As a consequence, the undersigned scheduled a hearing on the discovery disputes for

December 10, 2013, and instructed the parties to meet and confer prior to the hearing in order to

attempt to resolve the discovery disputes without further court intervention.

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Case: 5:12-cv-01533-SL Doc #: 167 Filed: 12/16/13 1 of 14. PageID #: 2471

The parties were unable to resolve their differences, and, instead, additional discovery

disputes arose in the interim between the telephone conference and the hearing. Plaintiffs filed a

second Notice of Discovery Dispute relating specifically to Saint-Gobain on December 2, 2013, ECF

Dkt. #149, and a third Notice of Discovery Dispute relating specifically to Philips on December 4,

2013. ECF Dkt. #153. The parties submitted additional letter briefs in order to more fully explain

the new discovery disputes. ECF Dkt. ##157, 158, and 159 and 160. Prior to the hearing, the parties

were able to resolve three of the disputes – those relating to responses to Interrogatories ##1 and

4, and Saint-Gobain’s crystal growth reports from June 2008 to the present – as well as many of

Defendants’ discovery issues, which were not the subject of the current dispute. The parties spread

their agreement regarding future discovery production on the record prior to the commencement of

the hearing.

A brief explanation of the claims is necessary to understand the issue raised by the parties

in this discovery dispute. Plaintiffs allege that Saint-Gobain infringes Plaintiffs’ patent, U.S. Patent

No. 7,132,060 B2 (“the ’060 patent”), by manufacturing scintillation crystals that have a chemical

composition covered by the ’060 patent. Scintillation crystals emit light when exposed to ionizing

radiation, and are important to devices used in the nuclear medicine industry, including Positron

Emission Tomography (“PET”) scanners. Plaintiffs further allege that the Philips defendants have

infringed the ’060 patent by utilizing Saint-Gobain’s crystals in their PET scanners.

Determining the proper scope of discovery falls within the broad discretion of the trial court.

Lewis v. ACB Business Servs., Inc., 135 F.3d 389, 402 (6th Cir.1998). A party “may obtain

discovery regarding any nonprivileged matter that is relevant to any party's claim or defense.”

Fed.R.Civ.P. 26(b)(1). The federal discovery rules “are to be accorded a broad and liberal

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treatment.” Herbert v. Lando, 441 U.S. 153, 177, 99 S.Ct. 1635, 60 L.Ed.2d 115 (1979). The term

“relevant,” for the purposes of discovery, “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, 98 S.Ct. 2380, 57 L.Ed.2d

253 (1978). “[D]iscovery is permissible where it ‘appears reasonably calculated to lead to the

discovery of admissible evidence.’ ” Goodyear Tire & Rubber Co. v. Chiles Power Supply, Inc., 332

F.3d 976, 982 (6th Cir.2003) (quoting Fed.R.Civ.P. 26(b)(1)).

“Although a plaintiff should not be denied access to information necessary to establish [his]

claim, neither may a plaintiff be permitted ‘to go fishing and a trial court retains discretion to

determine that a discovery request is too broad and oppressive.’ ” Surles v. Greyhound Lines, Inc.,

474 F.3d 288, 305 (6th Cir.2007), quoting Marshall v. Westinghouse Elec. Corp., 576 F.2d 588, 592

(5th Cir.1978). The Court has discretion to limit or even preclude discovery which meets the

general standard of relevance found in Rule 26(b)(1) if the discovery is unreasonably duplicative,

or the burden of providing discovery outweighs the benefits, taking into account factors such as the

importance of the requested discovery to the central issues in the case, the amount in controversy,

and the parties’ resources. See Fed.R.Civ.P. 26(b)(2).

The discovery at issue for the most part relates to Plaintiffs’ efforts to determine the

composition of Saint-Gobain crystals in order to prove that the crystals infringe the ’060 patent. The

parties’ disagreement as to the scope of discovery is predicated upon differing opinions as to the

propriety of the methods Plaintiffs plan to undertake to prove or disprove infringement. Saint-

Gobain argues that it has provided the starting formulas for the crystals and the crystals themselves,

and, as a consequence, Plaintiffs have sufficient evidence of crystal composition. Plaintiffs counter

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that the crystals at issue are “not a lined compound, meaning start to finish, exactly the same

composition [Saint-Gobain] starts out with is what you get out of. They are a solid solution. And

a solid solution means that these crystals can change their composition during the growth process.”

ECF Dkt. #164 (“Tr.”) at 25-26.

Defendants further argue that – because the Court has ordered joint testing by a third-party

lab chosen by the parties, employing a joint protocol, also chosen by the parties – no additional

independent testing should be undertaken or additional testing results should be discoverable,

particularly since the joint testing results revealed no infringement. Plaintiffs’ counter that the joint

testing results are “hotly disputed,” and that Plaintiffs’ independent testing of Saint-Gobain crystals

purchased on the open market show infringement. Further, Plaintiffs question whether the crystal

upon which the joint testing was performed meets the performance specifications of Philips. Tr. at

33. Based upon the liberal nature of the discovery rules, Plaintiffs argue that Defendants should be

ordered to produce the requested discovery.

The undersigned will address each of the remaining disputes beginning with Plaintiffs’

requests for discovery from Saint-Gobain. Plaintiffs request: (1) data generated by Saint-Gobain’s

crystal growth software; (2) compositional test reports and protocol; (3) a custodial search of the

documents of a former Saint-Gobain employee; (4) documents from a prior litigation ordered to be

produced by the undersigned in a previous Order; and (5) information regarding the existence of

residual materials from Saint-Gobain’s compositional testing.1

1Plaintiffs assert that they have provided information regarding the existence of residual material fromPlaintiffs’ tests of Saint-Gobain’s crystals.

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A brief explanation of each request is necessary to understand the arguments of the parties.

According to the website of Cyberstar, the manufacturer of the crystal-growth puller used by Saint-

Gobain, Cyberstar’s machines are equipped with software that monitors and stores information

regarding the parameters of the crystal growth process. Plaintiffs have submitted the declaration of

one of their experts, Lucien N. Brush, in which Dr. Brush avers that the stored information2 would

be useful in formulating his opinion as to the chemical composition of the crystal at issue in this

case.

At the hearing, Plaintiffs argued that the “data points” from the software is essential to

“create a model of crystal growth to determine whether the final crystal infringes [Plaintiffs’]

compositional claims.” Tr. at 23. Plaintiffs further argued that the data is easily exportable. Saint-

Gobain asserted that the first request for the data at issue occurred on November 19, 2013, that the

data has not been the subject of a meet and confer, and that Saint-Gobain has not had the opportunity

to determine whether production of the Cyberstar data would be burdensome. Saint-Gobain further

argued that the data recorded by the Cyberstar software has nothing to do with the composition of

the crystals. Saint-Gobain likened Plaintiffs’ request to “going into a GM plant and asking for the

software for the robots that put together the equipment.” Tr. at 29. Finally, Saint-Gobain asserted

that Dr. Brush’s declaration falls far short of establishing the relevance of the data requested, and

that “you [do not] need to do modeling when you have the end crystals.” Tr. at 29. Having

considered the arguments of both sides, the undersigned finds that the data generated by the

2According to Cyberstar’s website, “All parameters (crucible diameter, solid and liquid density,crystal shape, growth speed, rotation speed, cooling duration...) needed to perform a crystal growth run arestored in the database.”

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Cyberstar software is relevant and reasonably calculated to lead to the discovery of admissible

evidence. Accordingly, Saint-Gobain shall furnish the data on or before January 13, 2014.

Next, Saint-Gobain has developed a test protocol for conducting compositional testing of

crystals by the Inductively Coupled Plasma Mass Spectrometry (“ICP-MS”) test method. Plaintiffs

have requested the production of Saint-Gobain’s protocol for testing crystals by ICP-MS method,

and Saint-Gobain has provided those documents.3 However, Plaintiffs now seek documents related

to any and all compositional testing, not just ICP-MS test results.

Plaintiffs contend that they only recently discovered that Saint-Gobain had undertaken

compositional testing that did not involve the ICP-MS test method. Saint-Gobain asserts that it has

complied with the original request for production of documents, which involved searching ten years

of documents, and that Plaintiffs are now attempting to broaden the scope of their request. Saint-

Gobain argued that Plaintiffs’ amended request for documents wastes time and prevents the parties

from moving forward and making progress with the case. Counsel for Saint-Gobain warranted to

the undersigned that Saint-Gobain has not withheld test results of which she is aware. Having

considered the arguments of both sides, the undersigned finds that the test results, to the extent that

they exist, are relevant and reasonably calculated to lead to the discovery of admissible evidence.

Accordingly, Saint-Gobain shall determine whether additional compositional testing results exist,

and, if so, furnish the test results to Plaintiffs by January 13, 2014.

3Plaintiffs asked the undersigned to order Saint-Gobain to inform Plaintiffs where the ICP-MS testresults are in Saint-Gobain’s document production, because Plaintiff’s cannot find them. Counsel for Saint-Gobain volunteered to identify the location of the test results.

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Third, Plaintiffs request a custodial search of the documents4 of Zbigniew Galazka, a former

Saint-Gobain employee who left the company in 2007, if any of his documents are still in the

custody of Saint-Gobain. Plaintiffs suggested a custodial search similar to the searches conducted

on other custodians at Saint-Gobain. Saint-Gobain responds that Plaintiff’s have failed to

demonstrate that Mr. Galazka’s documents contain relevant information that has not been otherwise

produced from the files of other custodians whose records Saint-Gobain has already produced.

Having considered the arguments of both sides, the undersigned finds that Mr. Galazka’s documents,

to the extent that they exist, are relevant and reasonably calculated to lead to the discovery of

admissible evidence. Accordingly, Saint-Gobain shall conduct a custodial search and furnish the

documents to Plaintiffs by January 13, 2014.

Fourth, Plaintiffs contend that Saint-Gobain has not fully complied with the undersigned’s

July 3, 2013 Order regarding documents from the litigation captioned Siemens Med. Solutions USA,

Inc. v. Saint-Gobain Ceramics & Plastics, Inc., No. 07CV0190 (Del. 2007). See ECF Dkt. #130.

Specifically, Plaintiffs request “at least two expert reports about damages and all trial transcripts.”

ECF Dkt. #150 at p. 4. Saint-Gobain contends that all documents from the Siemens litigation have

been produced, with the exception of confidential information subject to a protective order, which

Siemens has refused to disclose. Saint-Gobain further argues that the information sought by

Plaintiffs relates to a different patent (a Siemens patent) and different issues than are presented in

this case, and, therefore, is not relevant. Finally, Saint-Gobain argues that Plaintiffs are requesting

that Saint-Gobain attempt to find documents at other law firms, and to undertake a second analysis

4Of particular interest to Plaintiffs is the “program of PML process developing at [Saint-Gobain]based upon his experience in PML (SiO2 stoechiometry variation, charge loading method, growthatmosphere, seed orientation).” ECF Dkt. #150.

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of whether there is restricted information or confidential information, and that Plaintiffs’ request is

overly burdensome.

The July 3, 2013 Order, read, in pertinent part:

Accordingly, the Court ORDERS that the contract attorney, who will be paid byPlaintiffs at a rate of $100.00 per hour, for a maximum of 25 hours or $2500.00,review the contents of the 60 boxes and identify and pull those documents from theSiemens case that are responsive to Plaintiffs’ discovery requests, which includes:

(1) the deposition transcripts;

(2) the expert reports;

(3) any and all sealed trial court filings, including interrogatoryresponses, admissions, and any other written pleadings ordiscovery;

(4) trial transcripts; and

(5) all demonstrative evidence.

Upon identification and segregation of these materials, the contract attorney is tosubmit them to counsel for Defendants and Defendants shall thereafter produce thematerials to Plaintiffs no later than July 19, 2013. For those materials thatDefendants believe are protected, privileged or otherwise not subject to production,Defendants shall also provide to Plaintiffs a log that accompanies the produceddocuments. That log shall identify the document withheld and an explanation as tothe reason for nonproduction. Defendants shall produce the log also by July 19,2013.

ECF Dkt. #130 at 4. Having considered the arguments of both sides, the undersigned finds that the

requested documents are relevant and reasonably calculated to lead to the discovery of admissible

evidence. Accordingly, to the extent that the documents are not protected, privileged or otherwise

not subject to production, Saint-Gobain shall furnish the remaining documents identified in the

undersigned’s July 3, 2013 Order to Plaintiffs by January 13, 2014.

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In their final argument with respect to discovery from Saint-Gobain, Plaintiff ask Saint-

Gobain whether it has residual powder from previous crystal testing in its possession. At the

hearing, Plaintiffs predicated their argument on the fact that Saint-Gobain had initially told them that

it had a single pixel in it possession, but Plaintiffs recently came to believe that Saint-Gobain also

had residual powder in its custody. Plaintiffs clarified at the hearing that they only want to know

if the residual powder exists at this point in the discovery process. Saint-Gobain asserted that it has

already sifted through ten years of documents in order to produce the compositional test results

requested by Plaintiffs. As a consequence, Saint-Gobain argued that Plaintiffs’ current request is

overly burdensome, to the extent that it would force Saint-Gobain to undertake a second

investigation solely to determine if such residual material from testing done in the ordinary course

of business exists. Saint-Gobain asserted that the joint testing, which was undertaken on jointly

selected samples, showed non-infringement. Saint-Gobain further asserted that “[Plaintiffs have]

seen the starting point that says [Saint-Gobain does not] infringe, and they’ve seen the end point that

says [Saint-Gobain does not] infringe, and they’re looking for something to keep them alive.” Tr.

at 38.

At a status conference with the Honorable Sara Lioi, conducted immediately following the

hearing before the undersigned, Judge Lioi indicated her intention to set briefing schedules on the

issues of “sample crystal testing” at a status conference to be held on February 6, 2014.

Accordingly, the undersigned shall defer the resolution of the parties discovery dispute regarding

residual powder from previous crystal testing to Judge Lioi.

Turning to Plaintiffs’ discovery disputes with the Philips defendants, Plaintiffs request: (1)

the production of sample crystals in the Philips defendants possession, (2) another document search

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that includes search terms specifically selected by Plaintiffs; (3) any and all license agreements that

the Philips defendants have with respect to all of the components of its PET scanners; (4) documents

regarding the Philips defendants’ other crystal supplier; and (5) financial information for the PET

scanners.

First, Plaintiffs request sample crystals that the Philips defendants have within its possession.

The Philips defendants contends that the requested crystals are part of a Saint-Gobain module that

were sent to CPI for refurbishment and repair due to adhesion quality (glue) issues (“Philips mixed

module”). The Philips defendants contends that the Philips mixed module includes some unknown

and unidentifiable mix of Saint-Gobain crystals and CPI crystals, which “invites confusion,

misidentification, and chain of custody issues.” ECF Dkt. #157 at 2. Plaintiffs argue that the

possibility of confusion supports Plaintiffs’ contention that the Philips defendants cannot operate

its PET scanners with a non-infringing crystal.

At a status conference with the Honorable Sara Lioi, conducted immediately following the

hearing before the undersigned, Judge Lioi instructed Plaintiffs to “determine if it is necessary or

feasible to conduct sample testing on crystals in the Philips mixed module” and to propose a testing

protocol by January 14, 2014. See Non-document entry dated December 10, 2013. The minutes of

the status conference also reveal that Plaintiffs may withdraw their request for the mixed module if

they can acquire crystals from the Philips defendants’ other supplier of scintillation crystals, Crystal

Photonics Inc. (“CPI”). Plaintiffs’ efforts to acquire crystals from CPI are the subject of a hearing

currently scheduled for December 17, 2013 in the Middle District of Florida. In addition and as

stated previously, Judge Lioi indicated her intention to set briefing schedules on the issue of “sample

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crystal testing” at a status conference to be held on February 6, 2014. Accordingly, the undersigned

shall defer the resolution of the parties discovery dispute regarding the mixed module to Judge Lioi.

Next, Plaintiff requests that the Philips defendants undertake another search of their

documents, as the original search only resulted in the production of 103 documents. Plaintiffs are

concerned that the original search did not include all relevant search terms. The Philips defendants

argued that they requested search terms from Plaintiffs prior to undertaking the previous search,

specifically explaining to Plaintiffs’ counsel that they did not want to have to undertake another

search in the future. However, Plaintiffs did not provide the requested search terms. The Philips

defendants further assert that Plaintiffs’ proposed search terms are too general and will result in a

voluminous document production with largely irrelevant material. Having considered the

arguments of both sides, the undersigned orders the Philips defendants to undertake another

document search using Plaintiffs’ requested search terms to be completed on or before January 14,

2014.

Third, Plaintiffs have requested information regarding any and all license agreements that

Philips has with respect to all of the components of its PET Scanners. Philips has responded that

it has no license agreements for the scintillation crystals at issue in this case. Philips argues that

license agreements that relate to other components of the PET scanners are not relevant to the case

at bar or reasonably related to the patented technology at issue here. Nonetheless, Philips has

offered to produce any licenses for PET scanner hardware components, but Plaintiffs continue to

request license agreements for any and all components, including software components.5

5Counsel for the Philips defendants indicated at the hearing that the software licenses at issue involvebed positioning and image manipulation. Tr. at 62.

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In determining a reasonable royalty, courts consider, among other factors, “[t]he rates paid

by the licensee for the use of other patents comparable to the patent in the suit.” See

Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F.Supp. 1116 (S.D.N.Y.1970), modified,

Georgia-Pacific Corp. v. U.S. Plywood-Champion Papers, Inc., 446 F.2d 295 (2d Cir.1971), While

Georgia-Pacific does indicate that the patents to which courts may look to determine a reasonable

royalty rate must be “comparable,” courts have often interpreted this factor broadly. See Mobil Oil

Corp. v. Amoco Chems, Corp., 915 F.Supp. 1333, 1354 (D.Del.1994); Procter & Gamble Co. v.

Paragon Trade Brands, Inc., 989 F.Supp. 547, 607-08 (D.Del.1997).

Plaintiffs are nonetheless required to articulate a reasonable relationship between the claimed

technology and the licensed technology in order to support a broad request for licenses. See, e.g.,

Bally Techs. Inc. v. Business Intelligence Sys. Solutions, Inc., 2011 WL 3892221, *3 (D. Nev. 2011)

(denying motion to compel production of licenses where plaintiff failed to show “that license

agreements involving other patents are sufficiently relevant to be discoverable.”); Probert v. The

Clorox Co., 2009 WL 1011490, *9-*10 (D. Utah 2009) (denying motion to compel production of

license agreements for products that were not “comparable to” the patented product); Accord

Resqnet.Com, Inc. v. Lansa, Inc., 594 F.3d 860, 869 (Fed. Cir. 2010) (“This court has long required

district courts performing reasonable royalty calculations to exercise vigilance when considering

past licenses to technologies other than the patent in suit. . .particularly when it is doubtful that the

technology of those license agreements is in any way similar to the technology being litigated

here.”).

Plaintiffs have offered the declaration of one of their experts, Michael J. Lasinski in support

of its request for all of the licenses for the PET scanners. According to the declaration, Lasinski

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“want[s] to review licenses to all components – either hardware of software – of Philips medical

imaging devices. ECF Dkt. #159-3. Having considered the arguments of both sides, the

undersigned finds that there exists a reasonable relationship between the licenses for scintillation

crystals and the software licenses at issue in this case. Accordingly, Saint-Gobain shall furnish any

and all software licenses requested by Plaintiffs on or before January 14, 2014.

Fourth, Plaintiffs seek information regarding CPI, including the number of crystals purchased

from CPI and correspondence about choosing CPI as a supplier. Plaintiffs contend that this

information is relevant to their calculation of lost profits. In a previous discovery dispute, the

undersigned ordered Philips to produce documents sufficient to show the chemical composition and

manufacturer of all crystals used in the Philips defendants’ PET scanners designed, manufactured

or sold since November 7, 2006, including those supplied by CPI. See ECF Dkt. #125.

The Philips defendants contends that they have fully complied with the undersigned’s Order,

and, insofar as Plaintiffs have not asserted that CPI’s crystals infringe the ’060 patent6, the

information relating to the number of crystals purchased and the correspondence regarding the

Philips defendants’ choice of CPI as a supplier is not relevant. The Philips defendants further argue

that they have produced some discovery relating to their business relationship with CPI, as a

compromise, but that Plaintiffs current request is overly burdensome and unlikely to lead to

discoverable information.

Having considered the arguments of both sides, the undersigned finds that Plaintiffs have

misinterpreted the undersigned’s previous Order. The Philips defendants have complied with the

6After CPI was identified as Saint-Gobain’s other supplier, Plaintiffs waited three months beforeseeking discovery. A hearing is scheduled on December 17, 2013 in the Middle District of Florida to hearCPI’s objections to Plaintiffs’ subpoena.

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Order, insofar as they have furnished documents that identify CPI as the manufacturer of the

crystals. Counsel for the Philips defendants warranted at the hearing that they have no documents

relating to the composition of the CPI crystals because they do not manufacture them. Moreover,

Plaintiffs have not demonstrated that the additional information sought, that is, documents revealing

the number of crystals purchased from CPI and the Philips defendants’ correspondence about

choosing CPI, is relevant, insofar as they have not accused CPI of infringement.

Finally, the parties previously agreed that the Philips defendants would produce financial

information for its PET scanners. Plaintiffs believed that the agreement covered all of Philips PET

scanners, not just those comprised exclusively of Saint-Gobain crystals. The Philips defendants, on

the other hand, argue that Plaintiffs originally sought financial information solely on the allegedly

infringing PET scanners. The Philips defendants argue that financial information regarding PET

scanners with non-infringing crystals is irrelevant. At the status conference immediately following

the hearing, Judge Lioi indicated her intention to set a briefing schedule on the issue of lost profits

on PET scanners for February 6, 2014. Accordingly, the undersigned defers the resolution of

Plaintiffs request for financial information on the PET scanners with the non-infringing crystals to

Judge Lioi.

IT IS SO ORDERED.

DATE: December 16, 2013

/s/ George J. Limbert GEORGE J. LIMBERTUNITED STATES MAGISTRATE JUDGE

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Zecotek Discovery Hearing

Documents

Transcript of Zecotek Discovery Hearing