Impinj, Inc. v. NXP USA, Inc. ( 2022 )

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 IMPINJ, INC., Case No. 19-cv-03161-YGR (AGT) 8 Plaintiff, ORDER DENYING IMPINJ’S 9 v. MOTIONS TO COMPEL 10 NXP USA, INC., Re: Dkt. Nos. 176, 198 Defendant. 11 12 13 Impinj brings this patent infringement suit against NXP USA, asserting direct infringement 14 of four Impinj patents relating to integrated circuits (“ICs”). Before the undersigned are two 15 motions to compel, both filed by Impinj after the close of fact discovery, seeking documents and 16 30(b)(6) testimony from NXP USA relating primarily to an unpled theory of induced 17 infringement. Dkts. 176, 198. After the motions to compel were taken under submission, Impinj 18 sought leave from Judge Gonzalez Rogers to amend its complaint and infringement contentions to 19 add claims of induced infringement, which, if granted, would have undisputedly rendered much of 20 the discovery at issue relevant and discoverable. But Judge Gonzalez Rogers denied Impinj’s 21 motion for leave to assert inducement, finding that “Impinj has not shown good cause to amend at 22 this late stage in the litigation, and in any event, amendment to the complaint would be futile.” 23 Dkt. 262 at 1. That order effectively precludes the discovery Impinj seeks through the pending 24 motions to compel. Both motions are denied. 25 A. Background 26 U.S.-based company NXP USA is the sole defendant in this case. NXP USA does not 27 manufacture the accused ICs—its foreign affiliates do, overseas—but it is responsible for sales in 1 who are not, and have never been, parties to this action. 2 This lawsuit, filed in June 2019, is one of three pending patent infringement cases between 3 Impinj and NXP USA. As noted, the only claims asserted in this case concern direct infringement 4 by NXP USA. Direct infringement is governed by 35 U.S.C. § 271(a), which provides that 5 “whoever without authority makes, uses, offers to sell, or sells any patented invention, within the 6 United States or imports into the United States any patented invention during the term of the 7 patent therefor, infringes the patent.” 35 U.S.C. § 271(a). Section 271(a)’s reach is limited to 8 activity within the United States, as “no infringement occurs when a patented product is made and 9 sold in another country.” Microsoft Corp. v. AT & T Corp., 550 U.S. 437, 441 (2007); see also 10 Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc., 711 F.3d 1348, 1371 (Fed. Cir. 11 2013) (“It is axiomatic that U.S. patent law does not operate extraterritorially to prohibit 12 infringement abroad.”). “Thus, while U.S. patent law allows for ‘damages adequate to 13 compensate for the infringement,’ there is no compensation for a defendant’s foreign exploitation 14 of a patented invention, as such activity is not infringement at all.” Kajeet, Inc. v. Qustodio, LLC, 15 2019 WL 8060078, at *13 (C.D. Cal. Oct. 22, 2019) (quoting Power Integrations, 711 F.3d at 16 1371 (citing 35 U.S.C. § 284)). “A patentee’s remedy against such foreign activity lies, if 17 anywhere, in foreign law.” Largan Precision Co, Ltd v. Genius Elec. Optical Co., 86 F. Supp. 3d 18 1105, 1110 (N.D. Cal. 2015) (citing Microsoft, 550 U.S. at 456). With that brief context, the 19 Court now turns to Impinj’s motions to compel. 20 B. Motion to Compel Documents 21 In its first motion to compel, Impinj seeks documents from NXP USA concerning (1) 22 foreign sales of the accused ICs, (2) the role of NXP USA’s foreign affiliates in the production, 23 distribution, and sale of the accused ICs, and (3) any agreements between NXP USA and its 24 customers regarding this litigation. Dkt. 176. Impinj, as the party moving to compel this 25 discovery, has the initial burden of establishing that the information sought “is relevant to any 26 party’s claim or defense and proportional to the needs of the case.” Fed. R. Civ. P. 26(b)(1); see 27 Williams v. Condensed Curriculum Int’l, No. 20-cv-05292-YGR (RMI), 2021 WL 5069946, at *2 1 documents it seeks. 2 1. Foreign Sales of the Accused ICs 3 It is undisputed that NXP USA produced (more than a year ago) detailed sales information 4 for all accused ICs shipped to the United States during the damages period. But Impinj now seeks 5 information concerning foreign sales of the accused ICs—i.e., sales made by NXP USA’s third- 6 party affiliates outside the United States. Impinj’s leading argument for compelling production of 7 the foreign sales information is that it is directly relevant to issues of induced infringement. That 8 argument, however, is foreclosed by Judge Gonzalez Rogers’s recent order denying Impinj’s 9 request for leave to amend to assert induced infringement, see Dkt. 262. Impinj’s fallback 10 arguments, that the requested foreign sales information is “potentially relevant” to the reasonable 11 royalty determination and to commercial success, are also unpersuasive. 12 First, “[t]he royalty base for reasonable royalty damages cannot include activities that do 13 not constitute patent infringement, as patent damages are limited to those ‘adequate to compensate 14 for the infringement.’” Kajeet, 2019 WL 8060078, at *13 (quoting AstraZeneca AB v. Apotex 15 Corp., 782 F.3d 1324, 1343 (Fed. Cir. 2015)); see also Power Integrations, 711 F.3d at 1371 16 (recognizing that U.S. patent laws “do not thereby provide compensation for a defendant’s foreign 17 exploitation of a patented invention, which is not infringement at all”). Consequently, 18 “information regarding [a] defendant’s foreign sales is not relevant to the hypothetical negotiation 19 of the reasonable royalty amount because [the] defendant would not be liable for foreign sales that 20 do not violate U.S. patent laws.” Kajeet, 2019 WL 8060078, at *13 (collecting cases). 21 Second, to the extent foreign sales could theoretically relate to commercial success—one 22 of several “secondary considerations” that a patentee may introduce to respond to one form of 23 invalidity (obviousness)—NXP USA has sufficiently demonstrated that the burden of production 24 outweighs any marginal relevance. See Dkt. 186-1 (Hendershot Decl.) ¶¶ 2–4. Indeed, Impinj 25 offers no persuasive explanation as to why it needs the granular worldwide data it seeks to prove 26 commercial success, especially when it already has detailed data on its own sales and NXP USA’s 27 sales, as well as information about the size of the relevant global market and the overall size of 1 2. Role of NXP USA’s Foreign Affiliates in the Supply Chain 2 Impinj next seeks documents relating to the role of NXP USA’s foreign affiliates in 3 making, distributing, and selling the accused ICs.1 Impinj claims this information is relevant to 4 “potential direct and indirect infringement by [NXP USA’s] affiliates” and openly admits that “it 5 is seeking this discovery to consider seeking [] to add NXP’s affiliates based upon direct and 6 indirect infringement[].” Dkt. 187-1 at 3 (emphasis added). NXP USA’s foreign affiliates are not, 7 and have never been, parties to this action, and “discovery cannot be used as a fishing expedition 8 for evidence of claims that have not been properly pled.” Torio v. Wells Fargo Bank, N.A., No. 9 16-cv-00704-HRL, 2016 WL 2344243, at *5 (N.D. Cal. May 4, 2016); see also Asetek Danmark 10 A/S v. CoolIT Sys. Inc., No. 19-cv-00410-EMC (LB), 2021 WL 4699170, at *2 (N.D. Cal. Oct. 8, 11 2021) (emphasizing that parties “have no entitlement to discovery to develop new claims or 12 defenses that are not already identified in the pleadings”) (citation omitted). Impinj’s request to 13 compel these documents is denied. 14 3. NXP USA’s Agreements with Customers Regarding this Litigation 15 Impinj also seeks production of “any agreements between NXP and customers regarding 16 this litigation (e.g., indemnity agreements),” again claiming relevance only as to induced 17 infringement. Dkt. 176 at 5; see Dkt. 196 at 3–4. Impinj’s request to compel these agreements is 18 denied. 19 C. Motion to Compel Additional 30(b)(6) Testimony 20 Impinj’s second and overlapping motion to compel, filed months after the close of fact 21 discovery, seeks additional 30(b)(6) testimony regarding foreign sales of the accused ICs and the 22 activities of NXP USA’s foreign affiliates. Dkt. 198. In addition to being untimely under the 23 Civil Local Rule 37-3 (“no motions to compel fact discovery may be filed more than 7 days after 24 the fact discovery cut-off”), Impinj’s motion to compel further testimony is largely a rehash of its 25 1 During the discovery hearing on this dispute, NXP USA’s counsel confirmed that in June 2021, 26 in response to Impinj’s interrogatory seeking information regarding NXP’s corporate structure and the supply chain of the accused ICs, NXP USA provided information “specifically detailing a 27 number of NXP entities that are involved in the manufacture, shipment, testing, post processing of ] motion to compel documents, and is denied for the same reasons. In short, and as explained 2 || above, information regarding foreign sales by one foreign third party to another foreign third party 3 of an accused product manufactured and shipped outside the United States is simply not relevant 4 || to direct infringement by NXP USA—the only claim, and the only defendant, in this case. See 5 || MEMC Elec. Materials, Inc. v. Mitsubishi Materials Silicon Corp., 420 F.3d 1369, 1377 (Fed. Cir. 6 || 2005) (emphasizing that “the only activities that are relevant to direct infringement are those 7 || activities that take place within the borders of the United States’) (citation omitted). 8 te Kk ok 9 For the reasons set forth above, Impinj’s motions to compel are denied in their entirety. 10 IT IS SO ORDERED. 1] Dated: November 1, 2022 13 A . TSE 14 United States Magistrate Judge 16 Oo Z 18 19 20 21 22 23 24 25 26 27 28