Cameron Lanning Cormack v. United States , 2014 U.S. Claims LEXIS 664 ( 2014 )

In the United States Court of Federal Claims
No. 13-232C
(Filed: July 18, 2014)
************************************* ) Patent case; discovery dispute;
) attorney-client privilege; work-product
CAMERON LANNING CORMACK, ) protection; claw-back request; RCFC
) 26(b)(5)(B); Fed. R. Evid. 502(b);
Plaintiff, ) compelled production of documents
) from an affiliated nonparty foreign
v. ) corporate entity that joined with the
) party in development of the allegedly
UNITED STATES, ) infringing product; discovery related to
) nonaccused products
Defendant, )
and )
)
NORTHROP GRUMMAN SYS. CORP. )
)
Defendant-Intervenor. )
)
*************************************
James L. Beausoleil, Jr., Duane Morris LLP, Philadelphia, Pennsylvania, for plaintiff.
With him on the briefs were Jeffrey S. Pollack and Samuel W. Apicelli, Duane Morris LLP,
Philadelphia, Pennsylvania, Anthony J. Fitzpatrick, Duane Morris LLP, Boston, Massachusetts,
and Rodney R. Sweetland and Christopher J. Tyson, Duane Morris LLP, Washington, D.C.
Kirby W. Lee, Attorney, Commercial Litigation Branch, Civil Division, United States
Department of Justice, Washington, D.C., for defendant. With him were Stuart F. Delery,
Assistant Attorney General, Civil Division, and John Fargo, Director, Commercial Litigation
Branch, Civil Division, United States Department of Justice, Washington, D.C. Of counsel were
Scott Bolden, Attorney, Commercial Litigation Branch, Civil Division, United States
Department of Justice, Washington, D.C., and Michael F. Kiely, United States Postal Service,
Washington, D.C.
Gregory H. Lantier, Wilmer Cutler Pickering Hale and Dorr LLP, Washington, D.C., for
defendant-intervenor.
OPINION AND ORDER
LETTOW, Judge.
In this patent case, plaintiff, Cameron Lanning Cormack (“Mr. Cormack”), filed a motion
to compel discovery responses from defendant-intervenor, Northrop Grumman Systems
1
Corporation (“Northrop Grumman Systems” or “Systems”), pursuant to Rule 37 of the Rules of
the Court of Federal Claims (“RCFC”). See Pl.’s Mot. to Compel Discovery Responses from
Def.-Intervenor (“Pl.’s Mot. to Compel”), ECF No. 37. During briefing related to this motion,
Systems filed a motion for leave to file a sur-reply. Def.-Intervenor’s Mot. for Leave to File Sur-
Reply, ECF No. 45. In his responsive brief, Mr. Cormack used a document produced by
Northrop Grumman Systems to support his opposition. See Pl.’s Resp. in Opp’n to Def.-
Intervenor’s Mot. for Leave to File Sur-Reply in Further Opp’n to Pl.’s Mot. to Compel (“Pl.’s
Opp’n to Def.-Intervenor’s Mot. for Sur-Reply”), ECF No. 47. Systems promptly asserted that
this document was subject to the attorney-client privilege and work-product protection, requested
claw-back of the document, and filed a motion to strike Mr. Cormack’s brief incorporating the
disputed document. See Def.-Intervenor’s Emergency Mot. to Strike Pl.’s Resp. to Mot. for
Leave to File Sur-Reply (“Def.-Intervenor’s Mot. to Strike”), ECF No. 48. That motion was also
briefed, and a hearing on the related motions was held on June 19, 2014.
BACKGROUND
On April 3, 2013, Mr. Cormack filed his complaint in this court, alleging that the United
States Postal Service (“Postal Service”) engaged in an unlicensed procurement and authorization
of manufacture and use of patented inventions, a claim arising under 28 U.S.C. § 1498. Compl.
¶¶ 2, 3. 1 In August 2010, Mr. Cormack had been granted United States Patent No. 7,781,693
(“the ’693 Patent”), entitled “Method and System for Sorting Incoming Mail.” Compl. ¶ 6.
Mr. Cormack alleged that the Postal Service infringed this patent when it contracted with
Northrop Grumman Systems for the manufacture and delivery of Flats Sequencing Systems
(“FSS”), a mail sorting device. Compl. ¶¶ 8-9, 32. Mr. Cormack further averred that, pursuant
to the contract, Northrop Grumman Systems actually manufactured and delivered 102 such
machines and that the Postal Service continues to use them. Compl. ¶¶ 13, 15, 28.
Shortly after Mr. Cormack filed his complaint, the court granted the government’s
unopposed motion to notify Northrop Grumman Systems as an interested party pursuant to
1
In pertinent part, 28 U.S.C. § 1498 provides:
Whenever an invention described in and covered by a patent of the
United States is used or manufactured by or for the United States
without license of the owner thereof or lawful right to use or
manufacture the same, the owner's remedy shall be by action
against the United States in the United States Court of Federal
Claims for the recovery of his reasonable and entire compensation
for such use and manufacture. . . . For the purposes of this section,
the use or manufacture of an invention described in and covered by
a patent of the United States by a contractor, a subcontractor, or
any person, firm, or corporation for the [g]overnment and with the
authorization or consent of the [g]overnment, shall be construed as
use or manufacture for the United States.
28 U.S.C. § 1498(a).
2
RCFC 14(b). Order of May 29, 2013, ECF No. 8. The government advised the court that its
contract with Northrop Grumman Systems contains an indemnity clause whereby Systems is
obligated to indemnify the government against liability for patent infringement. Def.’s
Unopposed Mot. for Rule 14 Notice at 2, ECF No. 6. Subsequently, Northrop Grumman
Systems filed a motion to intervene as a defendant-intervenor, ECF No. 13, which this court
granted the same day, Order of June 24, 2013, ECF No. 16.
I. CLAW-BACK REQUEST
During briefing related to Mr. Cormack’s motion to compel discovery responses,
Mr. Cormack filed a brief attaching an exhibit (“Exhibit 3”) which contained an e-mail from an
employee of Northrop Grumman Systems to another employee of Systems who was designated
in the e-mail as working in the Law Department but was not identified as an in-house counsel.
See Pl.’s Opp’n to Def.-Intervenor’s Mot. for Sur-Reply Ex. 3. The e-mail was dated
approximately one month after the commencement of this case, but prior to Systems’s
intervention. Id. Its subject line read “Some [I]nformation for FSS Patent Infringement.” Id.
Upon receiving Mr. Cormack’s brief, Systems’s counsel realized Systems had mistakenly
produced the e-mail. He informed Mr. Cormack’s counsel the morning after receiving the filing
that he believed Exhibit 3 constituted privileged information and asked Mr. Cormack’s counsel
to return or destroy all copies of the exhibit, citing RCFC 26(b)(5)(B). See Def.-Intervenor’s
Reply in Support of Mot. to Strike Pl.’s Resp. to Mot. for Leave to File Sur-Reply (“Def.-
Intervenor’s Reply in Support of Mot. to Strike”) Ex. 1 (Decl. of Gregory H. Lantier), ¶¶ 11-12,
ECF No. 55. Upon receiving the request, Mr. Cormack’s counsel ceased reviewing the exhibit
and destroyed all copies save one, which he sequestered. See Pl.’s Opp’n to Def.-Intervenor’s
Emergency Mot. to Strike Resp. to Mot. for Leave to File Sur-Reply (“Pl.’s Opp’n to Def.-
Intervenor’s Mot. to Strike”) at 1 n.1, ECF No. 53.
On June 16, 2014, four days after Exhibit 3 was filed, Northrop Grumman Systems
submitted a motion to strike the response by Mr. Cormack that included the e-mail as an exhibit.
Def.-Intervenor’s Mot. to Strike; Def.-Intervenor’s Mem. in Support of its Mot. to Strike (“Def.-
Intervenor’s Mem. Supporting Mot. to Strike”), ECF No. 49. Systems sought to claw back the e-
mail and to have Exhibit 3 and the responsive brief containing it stricken from the record. Def.-
Intervenor’s Mem. Supporting Mot. to Strike at 1-2. Plaintiff resisted this motion, noting that
RCFC 26(b)(5)(B) explicitly permits the court to view the pertinent document under seal and
contesting the applicability of the attorney-client privilege or the work-product protection to the
exhibit. See Pl.’s Opp’n to Def.-Intervenor’s Mot. to Strike at 1-10. Plaintiff also contended that
Northrop Grumman Systems waived any applicable privilege or protection by not taking
reasonable steps to prevent disclosure, as required by Fed. R. Evid. 502(b). Id. at 4-6, 8.
Systems countered that it had taken reasonable steps to prevent disclosure, and its counsel
submitted a sworn declaration describing the measures it took in that regard. Def.-Intervenor’s
Reply in Support of Mot. to Strike at 3 & Ex. 1. Systems emphasized that it notified plaintiff’s
counsel of the mistaken disclosure within hours of discovering it. Id. at 4.
3
A. Attorney-Client Privilege
Claims of privilege are governed by the principles of the “common law as [] interpreted
by United States courts in the light of reason and experience.” Fed. R. Evid. 501. The attorney-
client privilege “protects the confidentiality of communications between attorney and client
made for the purpose of obtaining legal advice.” Genentech, Inc. v. United States Int’l Trade
Comm’n, 122 F.3d 1409, 1415 (Fed. Cir. 1997) (emphasis added). The privilege exists to
“encourage full and frank communication between attorneys and their clients and thereby
promote broader public interests in the observance of law and administration of justice.” Upjohn
Co. v. United States, 449 U.S. 383, 389 (1981). The Supreme Court in Upjohn reasoned that
attorney-client privilege applies equally to both in-house and outside counsel. 449 U.S. at 389-
90. At issue here is whether the e-mail in question revealed a confidential communication, that
is, a communication made to an attorney for the purpose of receiving legal advice. See United
States v. United Shoe Mach. Corp., 89 F. Supp. 357, 358 (D. Mass. 1950) (Wyzanski, J.),
disapproved in other respects by American Standard Inc. v. Pfizer, Inc., 828 F.2d 734, 745-46
(Fed. Cir. 1987). In Upjohn, information sent from the company employees to the in-house
counsel “was needed to supply a basis for legal advice concerning compliance.” 449 U.S. at 394.
Counsel was trying to determine what illegal acts had potentially been committed and how best
to defend the company. Id. That is not the circumstance at hand here.
In the e-mail in question, the employee provided the in-house counsel with information
regarding the location of certain documents at the apparent request of counsel. Pl.’s Opp’n to
Def.’s Mot. for Sur-Reply Ex. 3. This is hardly a communication conveying information for the
purpose of obtaining legal advice. The e-mail relayed only the physical location of certain
documents, information that in-house counsel could not directly use to form the basis of her legal
advice for the company. Consequently, the e-mail in question does not fall under the protection
of the attorney-client privilege. 2
B. Work-Product Doctrine
Although the e-mail is not subject to the attorney-client privilege, it may nonetheless be
protected by the work-product doctrine. The work-product doctrine exists to protect against
“attempt[s], without purported necessity or justification, to secure written statements, private
memoranda and personal recollections prepared or formed by an adverse party’s counsel in the
course of his legal duties.” Hickman v. Taylor, 329 U.S. 495, 510 (1947). RCFC 26(b)(3)
codifies the work-product doctrine, stating that “[o]rdinarily, a party may not discover
documents and tangible things that are prepared in anticipation of litigation or for trial by or for
another party or its representative . . . .” RCFC 26(b)(3). In addressing coverage of the doctrine,
this court has previously looked to causation, asking whether a document was created for or in
anticipation of litigation to determine whether the document is subject to work-product
protection. See Eden Isle Marina, Inc., v. United States, 89 Fed. Cl. 480, 497 (2009) (“This court
2
Notably, Northrop Grumman Systems has provided plaintiff with copies of the
documents referenced in the e-mail and does not contest that those documents are properly
discoverable. Hr’g Tr. 11:16-20 (June 19, 2014).
Further citations to the transcript of the hearing will omit reference to the date.
4
concurs with the conclusion in Evergreen Trading, LLC that the simple causation test is the
preferred test.”) (citing Evergreen Trading, LLC ex rel. Nussdorf v. United States, 80 Fed. Cl.
122, 132-33 (2007)). The work-product doctrine is not absolute, however. “Where relevant and
non-privileged facts remain hidden in an attorney’s file and where production of those facts is
essential to the preparation of one’s case, discovery may properly be had.” Hickman, 329 U.S. at
511; see also RCFC 26(b)(3)(A)(ii) (providing for discoverability of attorney work-product if
“the party [seeking the documents] shows that it has substantial need for the materials to prepare
its case, and cannot, without undue hardship, obtain their substantial equivalent by other
means.”).
The critical question here is whether the e-mail at issue reveals Northrop Grumman
Systems’s in-house counsel’s mental processes concerning the litigation or whether it merely
transmitted unprivileged facts that might bear on a defense to Mr. Cormack’s case. Systems
argues that the e-mail was written in preparation for litigation and revealed the in-house
counsel’s mental processes, identifying information she sought in preparation for consideration
of defenses. Def.-Intervenor’s Mem. Supporting Mot. to Strike at 3. Mr. Cormack, however,
posits that the e-mail “does not contain the mental impressions, conclusions, opinions, advice or
direction of counsel. Rather it appears to be nothing more than an internal transmittal of factual
information.” Pl.’s Opp’n to Def.-Intervenor’s Mot. to Strike at 4.
The court concludes that the e-mail reveals a specific request for information made by in-
house counsel for Systems apparently for potential use in the FSS patent infringement litigation,
on the reasonable assumption that Systems would eventually be involved in the litigation.
Although the information revealed is factual in nature, i.e., the location of specific documents,
the nature of the request also reveals the in-house counsel’s thought processes. See United States
v. Nobles, 422 U.S. 225, 238 (1975) (“At its core, the work-product doctrine shelters the mental
processes of the attorney, providing a privileged area within which he can analyze and prepare
his client’s case.”); In re Seagate Tech., LLC, 497 F.3d 1360,1375 (Fed. Cir. 2007)
(acknowledging that both factual work-product and mental process work-product can be
protected, but stating that factual work-product is more readily discoverable upon a showing of
substantial need and undue hardship). Mr. Cormack has not made a showing of substantial need
or undue hardship sufficient to overcome the protections afforded to attorney work-product. See
Hickman, 329 U.S. at 509. Accordingly, the e-mail is protected under the work-product doctrine.
C. Waiver and Claw Back
The protection provided by the work-product doctrine can be waived expressly or by
implication. Eden Isle Marina, 89 Fed. Cl. at 503-04. Fed. R. Evid. 502(b) sets out the test for
determining whether a disclosure implicitly waives the work-product privilege:
(b) Inadvertent disclosure. When made in a federal proceeding . . . , the
disclosure does not operate as a waiver in a state or federal proceeding if:
(1) the disclosure is inadvertent;
(2) the holder of the privilege or protection took reasonable steps to
prevent disclosure; and
5
(3) the holder promptly took reasonable steps to rectify the error,
including, (if applicable) following Federal Rule of Civil Procedure
26(b)(5)(B).
Fed. R. Evid. 502(b). 3 Thus, the court must determine whether System’s disclosure was
inadvertent, whether Systems took reasonable steps to prevent its disclosure, and whether
Systems promptly took reasonable steps to rectify the error. See Sikorsky Aircraft Corp. v.
United States, 106 Fed. Cl. 571, 584 (2012).
The e-mail transmission to in-house counsel was mistakenly disclosed, and the question
whether the mistake was inadvertent is wrapped up with whether Northrop Grumman Systems
took reasonable steps to prevent its disclosure. See Silverstein v. Federal Bureau of Prisons, No.
07-cv-02471-PAB-KMT, 2009 WL 4949959, at *11-*12 (D. Colo. Dec. 14, 2009) (holding that
a “mistaken” production was not necessarily inadvertent upon consideration of the particular
circumstances of the production); cf. Heriot v. Byrne, 257 F.R.D. 645, 658-59 (N.D. Ill. 2009)
(considering “the total number of documents reviewed, the procedures to review the documents
before they were produced, and the actions of the producing party after discovering that the
documents had been produced” in determining whether a disclosure was inadvertent) (internal
citations and quotations omitted). But see Coburn Group, LLC v. Whitecap Advisors LLC, 640
F. Supp. 2d 1032, 1038 (N.D. Ill. 2009) (“In this court’s view, the structure of Rule 502 suggests
that the analysis under subpart (b)(1) is intended to be much simpler, essentially asking whether
the party intended a . . . work-product protected document to be produced or whether the
production was a mistake.”). The advisory committee’s notes to Fed. R. Evid. 502(b) cite with
approval a series of factors courts have used to determine whether an unintentional disclosure is
a waiver of privilege, including, “the reasonableness of precautions taken, the time taken to
rectify the error, the scope of discovery, the extent of disclosure[,] and the overriding issue of
fairness.” Fed. R. Evid. 502 advisory committee’s note, explanatory note, Subdivision (b),
Revised Nov. 28, 2007 (citing Lois Sportswear, U.S.A, Inc. v. Levi Strauss & Co., 104 F.R.D.
103, 105 (S.D.N.Y. 1985) and Hartford Fire Ins. Co. v. Garvey, 109 F.R.D. 323, 332 (N.D. Cal.
1985)). The note continues, however, by explaining that
[t]he rule does not explicitly codify [a] test, because it is really a set of non-
determinative guidelines that vary from case to case. The rule is flexible enough
to accommodate any of those listed factors. Other considerations bearing on the
reasonableness of a producing party’s efforts include the number of documents to
be reviewed and the time constraints for production. Depending on the
circumstances, a party that uses advanced analytical software applications and
linguistic tools in screening for privilege and work product may be found to have
taken “reasonable steps” to prevent inadvertent disclosure. The implementation
of an efficient system of records management before litigation may also be
relevant.
3
Fed. R. Evid. 502(a) addresses the consequences of an intentional disclosure of
privileged material, specifically whether an intentional disclosure serves as a broader subject-
matter waiver.
6
Fed. R. Evid. 502 advisory committee’s note. Particularly relevant here are the scope of
discovery and the use of advanced analytical software applications in the screening process. A
sworn declaration submitted by Systems’s counsel describes the process by which documents
produced for discovery were screened through a software application, how the e-mail at issue
was placed in a prescreened folder without having been screened, and how it was then produced.
Consequently, the document was produced without ever having been screened. See Def.-
Intervenor’s Reply in Support of Mot. to Strike Ex. 1. The mistake was in failing to screen the
e-mail before placing it in a folder with other documents that had been screened, and then in
producing the documents in the folder without a further screening cross-check.
During the course of discovery for this case, Systems has produced more than one million
documents. Def.-Intervenor’s Reply in Support of Mot. to Strike at 3. The scope of the
discovery, the use of advanced software to screen for privilege, and the affidavit describing the
numerous steps taken by Systems should have constituted reasonable steps to prevent disclosure.
Nonetheless, that those steps could have been, and in this instance were, bypassed raises a
significant issue. As one court noted, “The reasonableness of preventive steps surely includes
both a design and an implementation component. Theoretical or intended measures may sound
sufficient, but failure to implement such measures by reasonable execution could empty an
ostensibly valid process of any real efficacy.” First Tech. Capital, Inc. v. JPMorgan Chase
Bank, N.A., No. 5:12-CV-289-KSF-REW, 2013 WL 7800409, at *4 (E.D. Ky. Dec. 10, 2013).
In that case, an attorney stated that he had personally reviewed all 1,500 documents that were
ultimately produced and had physically separated the documents into separate piles. Id. For
reasons he could not explain, all 1,500 documents were produced, including a number of
privileged ones. Id. The court found that while human review of documents was a good plan,
the fact that the attorney attested to only spending an average of 9.84 seconds reviewing each
page was an unreasonable application of his generally reasonable method. Id. (“The rapidity of
review indicates an unreasonably small temporal component to the process. The resulting
undifferentiated production shows essentially no care in assuring [that] any segregation by [the
attorney would] affect[] the materials actually disclosed to [the defendant].”) Thus, the court held
that the producing party had waived any claim of privilege over the produced documents. Id. at
*5.
This case presents a somewhat similar set of circumstances in that a reasonable plan of
review was inadequately implemented, but there are at least two key differences. In First
Technology, the reviewing attorney spent an inadequate amount of time reviewing documents.
First Tech. Capital, 2013 WL 7800409, at *4. Here, the screening software was available and, if
used, could have identified the pertinent e-mail as potentially protected from disclosure.
Secondly, over a million documents have been produced in this case, as contrasted to only 1,500.
And, the disclosures in this case were made as “part of a larger production which went unnoticed
by the producer.” Galena Street Fund, L.P. v. Wells Fargo Bank, N.A., No 12-cv-00587-BNB-
KMT, 2014 WL 943115, at *10 (D. Colo. March 20, 2014) (internal quotation marks and citation
omitted) (holding that privileged documents produced despite an electronic screening process
were inadvertently produced and did not constitute a waiver where only 150 out of 208,000
7
documents were disputed). 4 Considering the specific circumstances of this case, the disclosure
of Exhibit 3 can properly be considered inadvertent, albeit mistaken, and the court finds that
counsel for Northrop Grumman Systems took reasonable steps to prevent its disclosure.
The final question is whether Northrop Grumman Systems “promptly took reasonable
steps to rectify the error.” See Fed. R. Evid. 502(b)(3). “The rule does not require the producing
party to engage in a post-production review to determine whether any protected communication
or information has been produced by mistake. But the rule does require the producing party to
follow up on an obvious indication that a protected communication or information has been
produced inadvertently.” Fed. R. Evid. 502(b) advisory committee’s note. Once a party realizes
a document has been accidentally produced, “it must assert that privilege with virtual
immediacy.” Sikorsky, 106 Fed. Cl. at 585. Here, Systems’s counsel notified Mr. Cormack’s
counsel within hours of receiving the filing containing the e-mail at issue as an exhibit and filed
a motion seeking to claw back the document and strike the relevant filing within four days. Def.-
Intervenor’s Reply Supporting Mot. to Strike at 4. Given the alacrity of Systems’s response to
discovering the mistaken disclosure, this court finds that Systems’s counsel acted promptly and
therefore did not waive its claim of privilege on those grounds. Cf. Sikorsky, 106 Fed. Cl. at 586
(finding waiver where party asserting privilege waited ten months to assert it); Eden Isle Marina,
89 Fed Cl. at 512-13 (finding waiver where party asserting privilege waited seven months to
assert it).
Systems asks that the court issue a claw-back order striking the e-mail from the record,
requiring counsel for Mr. Cormack to destroy or return his single sequestered copy of the e-mail,
and permitting Mr. Cormack’s counsel to refile the pertinent submission without reference to
the e-mail. Def.-Intervenor’s Mem. Supporting Mot. to Strike at 6-7. Because the e-mail in
question is protected under the work-product doctrine and Systems has not waived that
protection, a claw-back order is appropriate. Pursuant to Fed. R. Evid. 502(b) and RCFC
26(b)(5)(B), Mr. Cormack’s counsel must destroy or return the sequestered copy of the e-mail.
The filing containing Exhibit 3 will be stricken from the record, and Mr. Cormack is directed to
resubmit that filing without reference to the e-mail.
4
At the hearing, counsel for Northrop Grumman stated that following the discovery of
this mistaken disclosure, they reran the privilege screen on all 1,003,000 documents that they
have produced, including productions occurring prior to the production that included the exhibit
at issue. Hr’g Tr. 30:1-12. That screen revealed 31 other privileged or protected documents that
were mistakenly produced. Id. Counsel for Systems said that they are currently investigating the
reasons these other documents were produced, and “[i]f need be, we will be submitting – if they
challenge the privilege calls on those, we will be submitting affidavits.” Hr’g Tr. 30:16-18.
Counsel for Mr. Cormack asserted that three of the documents subject to this larger claw-back
request appear to be from productions that occurred before the production containing Exhibit 3.
Hr’g Tr. 26:8 to 28:9; see also Hr’g Exs. 1, 2, which circumstance suggests that procedures put
in place to prevent inadvertent disclosure were not fully functional.
8
II. THE MOTION TO COMPEL
A. Documents Possessed by Solystic, S.A.S.
Mr. Cormack has requested that Systems produce documents in the apparent possession
of Solystic, S.A.S. (“Solystic”), a wholly owned but indirect French subsidiary of the Northrop
Grumman Corporation that designs and develops mail sorting systems and products. Pl.’s Mem.
of Law in Support of Mot. to Compel Discovery Responses (“Pl.’s Mem. Supporting Mot. to
Compel”) at 4, ECF No. 37-1. 5 These documents, he contends, are relevant because Northrop
Grumman Systems jointly developed the FSS machine with Solystic and incorporated
components of Solystic’s TOP 2000, an automated flat sorting machine that preceded the FSS,
into the FSS. Id. Moreover, Mr. Cormack argues that Solystic is familiar with his ’693 patent
because Solystic had to recognize and differentiate its work from the ’693 patent to receive its
own European method patent for sorting postal items. Id. at 5. 6 The requested information, he
avers, is relevant to his infringement contentions.
Simply stated, the issue is whether Systems can be compelled to produce documents
currently in the possession of its parent corporation’s foreign indirect subsidiary, a nonparty in
this action. RCFC 34(a) provides that a party may serve a request for production of documents
“in the responding party’s possession, custody, or control.” RCFC 34(a)(1). 7 Control is
construed broadly, and it “does not require that the party have legal ownership or actual physical
possession of the documents at issue, but rather the right, authority, or practical ability to obtain
the documents from a nonparty to the action.” E.I. DuPont de Nemours & Co. v. Kolon Indus.,
Inc., 286 F.R.D. 288, 292 (E.D. Va. 2012) (internal quotation marks omitted) (quoting Bush v.
Ruth’s Chris Steak House, Inc., 286 F.R.D. 1, 5-6 (D.D.C. 2012)). In essence, the inquiry is
whether the party has access to the nonparty’s documents. See Gerling Int’l Ins. Co. v.
Commissioner, 839 F.2d 131, 141 (3d Cir. 1988).
5
Solystic is a wholly-owned subsidiary of NGC Denmark ApS, a company organized and
existing under the laws of Denmark. NGC Denmark is 98.7% owned by Northrop Grumman
International Holdings, B.V., a company organized and existing under the laws of the
Netherlands, and 1.3% owned by Northrop Grumman Overseas Holdings, Inc., a Delaware
corporation. Northrop Grumman International Holdings is a wholly-owned subsidiary of
Northrop Grumman Overseas Holding, which is a wholly-owned subsidiary of Northrop
Grumman Corporation. See Hr’g Ex. 3; Def.-Intervenor’s Mem. of Law in Opp’n to Pl.s’ Mot. to
Compel Discovery Responses (“Def.-Intervenor’s Opp’n to Mot. to Compel”) at 12, ECF No. 40.
6
Solystic holds European Patent No. EP 2225049 A2, titled “Method for Sorting Postal
Items Using a Process for Sorting Outputs Dynamic Allocation.” See Pl.’s Mem. Supporting
Mot. to Compel at 4. Before this patent was issued, an opposition proceeding required Solystic
to confront the ’693 patent. Id. at 5.
7
RCFC 34 is identical to Fed. R. Civ. P. 34.
9
Mr. Cormack contends that Solystic’s documents are within Systems’s control.
Denominating Systems and Solystic as sister corporations, he argues that common parentage
provides Systems with the requisite control to obtain the documents. See Pl.’s Reply to Def.-
Intervenor’s Opp’n to Pl.’s Mot to Compel (“Pl.’s Reply Supporting Mot. to Compel”) at 7-8,
ECF No. 42. 8 He further alleges that because Systems and Solystic jointly developed and
manufactured the FSS, the court can require Systems to comply with his discovery requests. Id.
at 9-10 (“Documents produced by [Systems] in discovery demonstrate that Solystic’s
involvement in the development of the accused device is so fundamental that to shield Solystic
from discovery would deprive Mr. Cormack of [necessary] information.”).
Systems, however, insists that it does not have the requisite control over or access to the
documents. It first argues that because Solystic is a European corporation, Mr. Cormack must
resort to the Hague Convention on the Taking of Evidence Abroad to obtain the requested
discovery. Hr’g Tr. 47:19-25; see also Pl.’s Mot. to Compel Ex. Q, at 2. This argument is
unpersuasive. The Supreme Court has held that the Hague Convention does not provide
exclusive or mandatory procedures, and that it need not be a first resort for litigants in the United
States seeking discovery from a foreign corporation. Société Nationale Industrielle Aérospatiale
v. United States District Court for the S.D. Iowa, 482 U.S. 522, 529 (1987). 9 Accordingly, this
court concludes that Mr. Cormack need not proceed via the Hague Convention but may attempt
to compel discovery under RCFC 34 and 37. 10
8
In his initial Motion to Compel, Mr. Cormack inaccurately characterized Solystic as a
wholly-owned subsidiary of Systems, arguing that Systems, as the parent corporation, had the
requisite control to obtain and produce Solystic’s documents. Pl.’s Mem. Supporting Mot. to
Compel at 19. That is incorrect, even though Systems concedes that both it and Solystic are
wholly owned, albeit indirectly in Solystic’s case, by Northrop Grumman Corporation. See Hr’g
Ex. 3.
9
The Court in Aérospatiale explained that although the Hague Convention procedures
were adopted to facilitate collection of evidence, they need not be used if they will be unduly
time consuming, expensive, or less likely to produce results than other means. 482 U.S. at 542.
10
Systems also cites a French blocking statute, which contemplates penalties for French
individuals who circumvent the Hague Convention and disclose information for use in foreign
judicial proceedings. Pl.’s Mot. to Compel Ex. Q, at 2. However, “[i]t is well settled that such
statutes do not deprive an American court of the power to order a party subject to its jurisdiction
to produce evidence even though the act of production may violate that statute.” Aérospatiale,
482 U.S. at 544 n.29 (citing Société Internationale Pour Participations Industrielles et
Commerciales, S.A. v. Rogers, 357 U.S. 197, 204-06 (1958)). The Supreme Court in Rogers
noted that a trial court “possesses wide discretion to proceed in whatever manner it deems most
effective.” 357 U.S. at 213. “In exercising that discretion where . . . a party claims that foreign
law prevents disclosure, the [Supreme] Court has called for a ‘particularized analysis.’” Linde v.
Arab Bank, PLC, 706 F.3d 92, 109 (2d Cir. 2013) (quoting Aérospatiale, 482 U.S. at 543). Here,
Systems has not endeavored to support such an analysis, and the court accordingly declines to
consider a claim that French law bars disclosure.
10
Systems, alternatively, contends that because it has no ownership interest in Solystic,
Mr. Cormack must present evidence akin to that required to pierce the corporate veil or to
establish Solystic as an “alter ego” of Systems to establish control and compel production.
Def.-Intervenor’s Opp’n to Mot. to Compel at 13. This argument reaches too far. While an
“alter ego” relationship is indicative of control, it is not required for control to be found. See,
e.g., Gerling, 839 F.2d at 141 (“The requisite control has been found only where the sister
corporation was found to be the alter ego of the litigating entity . . . or where the litigating
corporation had acted with its sister in effecting the transaction giving rise to suit and is
litigating on its behalf.” (emphasis added) (internal citations omitted)). Rather, courts consider a
variety of factors when determining whether a party has sufficient control over a nonparty for the
purpose of RCFC 34 and 37, including (1) the corporate structure of the party and nonparty; (2)
the nonparty’s connection to the transaction at issue in the litigation; and (3) the degree that the
nonparty will benefit from the outcome of the case. See Steele Software Sys. Corp. v. DataQuick
Info. Sys., Inc., 237 F.R.D. 561, 564-65 (D. Md. 2006); Afros S.P.A. v. Krauss-Maffei Corp., 113
F.R.D. 127, 130 (D. Del. 1986). Here, Mr. Cormack argues that both the corporate structure of
Systems and Solystic and Solystic’s involvement in the development of the FSS support a
finding of control.
The first factor, corporate structure, can be dispositive of control when a parent
corporation is the party to the lawsuit, and the moving party seeks discovery of the parent’s
wholly-owned subsidiary. See Gerling, 839 F.2d at 140. 11 In other situations, however,
corporate structure may not be dispositive, and the moving party must point to additional factors
indicative of control before production can be compelled. See Uniden, 181 F.R.D. at 307
(compelling production of documents from a party’s sister corporation where additional indicia
of control were present). Because Systems does not own Solystic, and the ultimate parent of
both, Northrop Grumman Corporation, is not a party to this litigation, corporate structure is not
dispositive of control.
Where evidence beyond corporate structure is required, courts look particularly to the
nonparty’s connection to the transaction at issue and the degree that the nonparty will benefit
from the outcome of the case. Steele Software, 237 F.R.D. at 565. Courts can infer control from
mutual involvement in the transaction at issue in the litigation. See Costa v. Kerzner Int’l
Resorts, Inc., 277 F.R.D. 468, 472 (S.D. Fla. 2011) (“Given their established corporate and
transactional connections, it is unlikely that [d]efendants [did] not have access to [or an] ability
to obtain documents and information in the possession of their . . . [a]ffiliates.”). The moving
party may point to the exchange of documents between the related entities in the ordinary course
of business, see Steele Software, 237 F.R.D. at 564 (citing Uniden, 181 F.R.D. at 306), or
agreements between the nonparty and the party to support a case for mutual involvement in the
11
Courts often find control where common relationships, such as ownership of the
nonparty, overlapping directors, officers, or employees, or financial relationships, bind the party
and the nonparty. For example, some courts hold that litigating parent corporations have control
over documents possessed by their wholly-owned subsidiaries. See Uniden Am. Corp v. Ericsson
Inc., 181 F.R.D. 302, 305-06 (M.D. N.C. 1998). Other courts have ruled that parent corporations
possess the necessary control when they own more than 50% of their foreign subsidiary’s stock.
See In re Uranium Antitrust Litig., 480 F. Supp. 1138, 1145 (N.D. Ill. 1979).
11
transaction at issue in the litigation, see E.I. DuPont de Nemours, 286 F.R.D. at 292. For
example, a court found that where a nonparty sister corporation was a “main actor” in the
transaction at issue, an inference of control could be drawn from that corporation’s having been
“inextricably intertwined in the transaction.” In re Global Power Equip. Grp., 418 B.R. 833, 844
(Bankr. D. Del. 2004).
Documents of record show that Systems jointly worked with Solystic to develop the key
technologies incorporated into the FSS. See Pl.’s Mem. Supporting Mot. to Compel Ex. 4. In its
proposal to the Postal Service, Systems acknowledged that Solystic had previously designed a
large portion of the system. Id. Ex. 7, at 3. The proposal also indicated that Solystic would
develop a new generation of “P[rinted ]C[ircuit ]B[oards]” for the FSS, id. at 15, and would help
Systems design a system complying with a “hiding places” requirement established by the Postal
Service, id. at 19. Moreover, Systems, through a subsidiary, Northrop Grumman Overseas
Services Corp., entered into a related technology transfer and license agreement with Solystic.
See Pl’s Opp’n to Def.-Intervenor’s Mot. for Sur-Reply Ex. 4. E-mail communications sent
contemporaneously with execution of the agreement reveal that Systems and Solystic were
working closely together. See id. Ex. 2. Among other things, a Consulting Contracts
Representative for Systems wrote at one point, “We need to ship the[] parts back for repair to
Solystic, our French subsidiary that manufactured them.” Id.
Taken together, the recitations in the proposal to the Postal Service, the agreement
between Systems and Solystic, and the related e-mails support plaintiff’s contention that Systems
and Solystic collaborated on the FSS design and show that Solystic was critical to the project. 12
The court finds that this collaboration equips Systems both with access to Solystic’s documents
and with the requisite power to obtain them, rendering Systems able and required to comply with
Mr. Cormack’s discovery requests in accordance with an order by the court.
B. Documents Related to Non-Infringing Products
Mr. Cormack seeks discovery into nonaccused products that fall within his definition of
“mail sorting product;” which, as specified, would include both FSS and non-FSS products. See
Pl.’s Mem. Supporting Mot. to Compel at 14, 17. RCFC 26 provides that “[p]arties may obtain
discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense.”
RCFC 26(b)(1). This rule should be applied no differently in patent cases than in other types of
cases. See SRI Int’l v. Matsushita Elec. Corp. of Am., 775 F.2d 1107, 1116 (Fed. Cir. 1985).
Mr. Cormack seeks information related to the development and functionality of non-FSS mail
sorting products because, “[t]o the extent that these products function in a manner that infringes
the ’693 Patent and were sold to the [g]overnment, Mr. Cormack would be entitled to amend his
[c]omplaint to add those products to this case.” Pl.’s Mem. Supporting Mot. to Compel at 17.
Additionally, Mr. Cormack asserts that information related to “non-FSS products that do not
practice the method taught by the ’693 Patent [is] useful to show the advantages and utility
gained through the FSS’s use of Mr. Cormack’s patented invention,” which is relevant for
12
In fact, the proposal lists Solystic as the only approved source for certain components of
the FSS at the time of Systems’s proposal to the Postal Service. See Pl.’s Mem. Supporting Mot.
to Compel Ex. 7, at 20.
12
determining damages in the form of a reasonable royalty. Pl.’s Mem. Supporting Mot. to
Compel at 17 (citing Georgia-Pacific Corp. v. United States Plywood Corp., 318 F. Supp. 1116,
1119-20 (S.D. N.Y. 1970)). Specifically, Mr. Cormack contends that Systems should be
required to produce documents responsive to Document Request Nos. 3-10, 12-14, 16-19, and
31-32, and to provide a more complete response to Interrogatory No. 12. Id. at 18; see also Pl.’s
Mot. to Compel Ex. E (Pl.’s First Set of Requests for Production of Documents and Things to
Northrop Grumman Systems). These document requests and Interrogatory No. 12 generally seek
detailed information related to the design, development, operation, and licensing of “each and
every Mail Sorting Product and Mail Sorting System.” See, e.g., id. Ex. E, at 12, ¶¶ 3, 10 (“All
documents and things which relate to or evidence the conception, development and/or design of
each model or series of Mail Sorting Product and Mail Sorting Systems designed, manufactured,
tested, used, or licensed by or for You for The United States of America in the United States in
the time period from January 1, 2003 to the present.”). 13
Northrop Grumman Systems opposes Mr. Cormack’s request, stating that “‘[n]on-FSS
mail sorting products’ – i.e., all [Systems] products not accused of infringement in this action –
have little or no relevance to the claims and defenses in this case.” Def.-Intervenor’s Opp’n to
Mot. to Compel at 6-7 (emphasis in original). Systems describes Mr. Cormack’s request as “an
unprecedented expansion of the scope of this litigation and . . . highly prejudicial.” Id. at 7.
As a preliminary matter, the court cannot accept Northrop Grumman Systems’s
characterization of Mr. Cormack’s request. The court does not read Mr. Cormack’s document
requests or interrogatories to be requesting “discovery of all of [the] company’s products that
[have] not been accused of infringement.” Hr’g Tr. 59:7-8 (emphasis added). That said, the
court finds Mr. Cormack’s definition of “Mail Sorting Product” to be overly broad and not
sufficiently tailored to discovery of relevant documents. In his First Set of Interrogatories,
Mr. Cormack defined “Mail Sorting Product” to mean:
any product, including without limitation, equipment, hardware
products, firmware products, or software products, relating to a
Mail Sorting System, including without limitation, flats sorting
machine (FSM), flats sorting equipment (FSE), flats sequencing
system (FSS) equipment, mail sorting machine, mail sorting
equipment, automatic induction equipment, in-feed equipment,
image processing equipment, carousel equipment, integrated tray
converter equipment, electrical components, components of the
same, combinations of the same, and hardware, firmware or
software related to the same.
13
Interrogatory No. 12 requests that Northrop Grumman Systems “[i]dentify by Bates
number all patent licenses and other agreements, as well as documents relating to or evidencing
negotiations for a patent license or other agreements, where such documents relate to Mail
Sorting Products and/or Mail Sorting Systems.” Pl.’s Mot. to Compel Ex. D, at 14.
13
Pl.’s Mot. to Compel Ex. D, ¶ 18 (Pl.’s First Set of Interrogatories to Northrop Grumman
Systems). 14
The other extreme position is equally untenable. Courts have not required plaintiffs to
name specifically the products respecting which they seek discovery to establish their relevance
to the patent at issue. Instead, a plaintiff must “identify those systems and the components,
characteristics, or elements allegedly causing infringement with requisite specificity.” Tesseron,
Ltd. v. R.R. Donnelley & Sons Co., No. 1:06 CV 2909, 2007 WL 2034286, at *1 (N.D. Ohio July
10, 2007). In summarizing existing precedent, a district court recently explained that “[c]ases
that have examined the issue of the discoverability concerning nonaccused products have
concluded that the scope of discovery may include products that are ‘reasonably similar’ to those
accused in a party’s preliminary infringement chart.” AGA Medical Corp. v. W.L. Gore &
Assocs., Inc., No. 10-3734, 2011 WL 11023511, at * 7 (D. Minn. Oct. 19, 2011) (permitting
discovery into a product closely related in function to the accused product). 15 In some instances,
while recognizing the permissibility of discovery into nonaccused products, courts have required
the requesting party to narrow the request. For example, in Tessera Inc. v. Sony Elecs., Inc., No.
10-0838-RMB-KMW, 2012 U.S. Dist. LEXIS 180771, at *8-*11 (D. Del. Aug. 6, 2012), a
magistrate judge determined that the plaintiff’s attempts to compel the defendant to identify all
of their “multi-chip stacked semiconductor products, and provide information about them” was
too broad because it would require production of information related to numerous products that
were not alleged to have infringed upon the patent-in-suit. Id., at *6, *10. The court directed the
plaintiff to narrow the applicable definition of “Your Products” to one limited to a relevant time
frame and sufficiently pertinent in function to the alleged infringement of the patents-in-suit. Id.,
at *11.
Northrop Grumman Systems relies on a series of decisions in support of its overarching
contention that discovery of nonaccused products is disfavored by courts, Def.-Intervenor’s
Opp’n to Mot. to Compel at 7-8, but these cases are of limited usefulness. 16 For example, in
14
Northrop Grumman Systems and the government noted that this same definition of mail
sorting products and requests for documents were served on the Postal Service. Hr’g Tr. 46:6-14
(“And the important note here is that arguments that you will hear no doubt from [Northrop
Grumman Systems’s counsel] will apply even more so to the United States Postal Service, whose
business is mail sorting machines and mail sorting devices.”); Hr’g Tr. 60:6-8 (“Of course,
essentially everything [the Postal Service] own[s] would qualify as a mail sorting product under
that definition.”).
15
The early Scheduling Order issued in this case required the parties to identify their
infringement contentions and non-infringement, unenforceability, and invalidity contentions by
February 14, 2014 and March 28, 2014, respectively. See Scheduling Order of Nov. 14, 2013,
ECF No. 33.
16
See, e.g., Samsung SDI Co., Ltd. v. Matsushita Elec. Indus. Co., Ltd., No. 05-8493-AG,
2007 WL 4302701, at *2-*3 (C.D. Cal. June 27, 2007) (relying heavily on interpretation of a
local patent rule in denying a party’s motion to compel discovery related to nonaccused
products).
14
Tesseron, the court expressly recognized that “a party claiming patent infringement may obtain
discovery of unidentified and unaccused systems under certain circumstances,” but that the
plaintiff had failed to make the required showing in that particular instance. Tesseron, 2007 WL
2034286, at *1; cf. Biax Corp. v. Nvidia Corp, 271 F.R.D. 200, 205 (D. Colo. 2010) (denying
plaintiff’s discovery requests regarding nonaccused products without a “more specific showing
of need or relevance.”). Here, Mr. Cormack has specifically pointed to the TOP 2000, produced
by Solystic, as being the prototype for the accused FSS machine. Pl.’s Mem. Supporting Mot. to
Compel at 18; see also Hr’g Tr. 32:22-25 (“The preprototype platform for the machine that we
have at issue in this case was something called the TOP[ ]2000.”). Northrop Grumman Systems
has not responded, even in part, to Mr. Cormack’s requests to the extent that there are products
similar in function to the FSS, such as the TOP 2000. Information related to the TOP 2000, as a
precursor to the FSS machine, is relevant to the determination of whether it or other similar
machines infringe upon Mr. Cormack’s patent, as well as relevant to the calculation of damages.
In other respects, Mr. Cormack is directed to more narrowly tailor his definition of “mail
sorting products” to those reasonably similar in function to the FSS, and Northrop Grumman
Systems is directed to respond to the document requests as so amended. 17 Mr. Cormack should
take care to specifically identify the elements or components of a machine that would render it
similar in function to the FSS machine and thus potentially infringing on the ’693 patent.
C. Documents Related to Damages
Mr. Cormack alleges that the damages he seeks in this case may be measured using
several different well-known methodologies: “(1) cost-savings to the [g]overnment; (2) lost
profits; or (3) a reasonable royalty.” Pl.’s Mem. Supporting Mot. to Compel at 2; see also
Georgia-Pacific, 318 F. Supp. at 1120. He argues that Northrop Grumman Systems has not
“provided full and complete responses to Mr. Cormack’s discovery requests, nor has it produced
documents related to these three damages theories.” Pl.’s Mem. Supporting Mot. to Compel at
2. Mr. Cormack seeks information related to “[Systems’s] revenues, costs of goods sold, and
profits related to the sale of mail sorting systems,” id. at 6, and information related to the
government’s cost-savings realized by using the FSS machines as contrasted to human sorters,
id. at 7.
Northrop Grumman Systems contends that Mr. Cormack’s motion to compel documents
related to damages is moot because Systems produced over 30,000 pages of such material on the
same date that the motion to compel was filed. See Def.-Intervenor’s Opp’n to Pl.’s Mot. to
Compel at 5-6. Mr. Cormack concedes that this production resolved certain issues but maintains
that it has not rendered the motion to compel wholly moot on this issue. Pl.’s Mem. Supporting
Mot. to Compel at 3-4. Nonetheless, Mr. Cormack has withdrawn his requests for production
seeking documents related to “revenues, costs of goods sold, and profits for FSS,” pending Mr.
17
For example, the bar code reader cited by Mr. Cormack’s counsel during the hearing on
the pending motion, Hr’g Tr. 45:2-4, does not seem sufficiently similar to an FSS-type mail
sorting machine to fall within an appropriate definition of “mail sorting product” subject to
document requests and interrogatories.
15
Cormack’s review of the produced documents. Id. at 3. 18 The motion to compel remains extant,
however, respecting two items. First, Mr. Cormack seeks production regarding the revenues,
costs of goods sold, and profit related to non-FSS mail sorting products and systems sold within
the United States. Id. at 3-4. Second, Mr. Cormack maintains that Northrop Grumman
Systems’s production of documents related to cost-savings to the government resulting from
18
Mr. Cormack has not, however, withdrawn his motion to compel a further response by
Systems to a related interrogatory seeking an analysis and summary of the documents provided.
Interrogatory No. 16 requests that Northrop Grumman Systems
[i]dentify separately, for each of the years in the time period
between January 1, 2003 and the present for Mail Sorting Systems
sold by you in the United States: (1) number of Mail Sorting
Systems sold; (2) your gross and net revenues related to the sale of
Mail Sorting Systems; (3) your costs of goods sold; and (4) your
gross and net profits related to the sale of Mail Sorting Systems,
and identify all documents related thereto, including but not
limited to documents responsive to Document Requests 117-120.
Pl.’s Mot. to Compel Ex. F, at 10 (Pl.’s Second Set of Interrogatories to Northrop Grumman
Systems).
Systems has provided Mr. Cormack with the number of FSS machines sold to the
government and the price paid for them, i.e., the revenues related to the sale of the accused
machines. Hr’g Tr. 56:12-20. As to gross and net profits and loss, Northrop Grumman Systems
explained at the hearing that the FSS contract has been a loss for the company, and “[t]he way in
which that loss is calculated greatly depends on how you want to value the different aspects of
the work that [Systems] put in.” Hr’g Tr. 56:23-25. Systems maintains that there is no single
document or comprehensive narrative response more readily available to it than to Mr. Cormack.
Def.-Intervenor’s Sur-Reply in Opp’n to Pl.’s Mot. to Compel Discovery (“Def.-Intervenor’s
Sur-Reply”) at 2. Northrop Grumman Systems asserts that it has provided all of the data related
to the “costs of goods sold” associated with performance of its contract with the Postal Service
and further interpretation and analysis of that data will likely be the subject of expert testimony
from all parties. Id.; see also Hr’g Tr. 56:21 to 58:7. In a related vein, Mr. Cormack complains
that Northrop Grumman Systems’s response to Interrogatory No. 16 consists of a 50-page list of
documents from which he is expected to develop a summary. Pl.’s Reply Supporting Mot. to
Compel at 4. Systems points to the fact that its contract with the Postal Service is thousands of
pages long and contains numerous performance requirements that have shifted over time, and
thus the precise costs associated with this contract are not easily culled from the data provided.
Hr’g Tr. 57:19-25. The court cannot compel Northrop Grumman Systems to produce documents
or submissions that do not exist. See Tech v. United States, 284 F.R.D. 192, 198 (M.D. Pa. 2012)
(“It is clear that the court cannot compel the production of things that do not exist. Nor can the
court compel the creation of evidence by parties who attest that they do not possess the materials
sought by an adversary in litigation.”); see also United States v. Capitol Supply, Inc., __ F. Supp.
2d __, __, No. 13-mc-0373, 2014 WL 1046006, at *9 (D.D.C. Mar. 19, 2014) (quoting Tech, 284
F.R.D. at 198). In the circumstances, the court has no reason to believe that Systems possesses a
readily available narrative responsive to the pertinent interrogatory.
16
using the FSS is deficient. Id. at 4-5 (“It is inconceivable that [Northrop Grumman Systems]
does not possess more documents responsive to this request.”). The court will address each of
Mr. Cormack’s contentions in turn.
First, Mr. Cormack, as already discussed, is entitled to discovery of revenues, costs of
goods sold, and profits for non-FSS mail sorting machines to the extent that “non-FSS mail
sorting machines” is limited to mail sorting machines that are functionally equivalent to the FSS
machine, such as a precursor to the FSS. At the very least, this information would be directly
relevant to Georgia-Pacific factors 8 and 9, viz., “[t]he established profitability of the product
made under the patent; its commercial success; and its current popularity” and “[t]he utility and
advantages of the patent property over the old modes or devices, if any, that had been used for
working out similar results,” respectively. Georgia-Pacific, 318 F. Supp. at 1120.
Second, while acknowledging some production responsive to his request for documents
related to cost-savings for the government, Mr. Cormack avers that more responsive documents
must be in Systems’s possession. Pl.’s Reply Supporting Mot. to Compel at 4-5. Systems’s
production consists of four documents, all originally created by the Postal Service, related to
cost-savings to the government. Id. In support of the contention that more documents must
exist, Mr. Cormack points to the ongoing breach-of-contract suit pending in this court between
the United States and Northrop Grumman Systems related to the same FSS contract at issue in
this case. Pl.’s Mem. Supporting Mot. to Compel at 13-14. In that case, the Postal Service is
seeking reimbursement for cost-savings it did not realize due to delayed delivery of the FSS
machines by Northrop Grumman Systems. See Answer to First Am. Compl. & Counterclaim
¶ 50, Northrop Grumman Systems Corp. v. United States, No. 12-286 (Fed. Cl. Nov. 26, 2012),
ECF No. 15. In Mr. Cormack’s view, because cost-savings are at the heart of the government’s
counterclaim against Northrop Grumman Systems in that suit, Systems must possess more
documents related to projected government cost-savings. See Pl.’s Mem. Supporting Mot. to
Compel at 5. Systems counters that the government’s projected cost-savings were calculated by
the government and Northrop Grumman Systems has no responsive documents other than those
already produced. Def.-Intervenor’s Sur-Reply at 2-3.
At the hearing, counsel for Systems reiterated that no other responsive documents exist
and that Mr. Cormack is mistaken in believing that Northrop Grumman Systems ever produced
marketing materials intended to convince the Postal Service of the cost-savings it could realize
by use of FSS machines. Hr’g Tr. 55:8-23. He explained that the contract with the Postal
Service was a fixed-price government contract. “The [Postal Service] was the one who
identified the need. Northrop [Grumman Systems] did not have to sell the [Postal Service] on
the idea that the FSS would be a beneficial device to have. What [Systems] had to do was
competitively bid on the contract, and it won it, and it had to fulfill it.” Hr’g Tr. 55:14-19.
Second, counsel has represented that the Postal Service made the statements regarding cost-
savings, and Systems asked the Postal Service how it arrived at the amount of alleged cost
savings. Hr’g Tr. 55:8-14. In response, Systems received the four documents that it has
produced to Mr. Cormack. Id. The court cannot compel Northrop Grumman Systems to produce
17
documents that it insists do not exist. Mr. Cormack’s motion to compel is denied as to this
issue. 19
CONCLUSION
For the reasons stated, Northrop Grumman Systems’s motion to strike Mr. Cormack’s
response to its motion for leave to file a sur-reply is GRANTED. 20 Mr. Cormack’s counsel is
directed to refile his response without reference to Exhibit 3. He is further directed to return or
destroy the one remaining copy of Exhibit 3 that he has sequestered.
Mr. Cormack’s motion to compel is GRANTED IN PART and DENIED IN PART. The
motion to compel is GRANTED insofar as Northrop Grumman Systems is directed to produce
documents in the possession of Solystic that relate to the FSS and other mail sorting machines
that have a function similar to the FSS, such as the TOP 2000. Northrop Grumman Systems is
also directed to produce documents related to nonaccused products to the extent they are
encompassed by a revised and narrowed definition of “mail sorting product.” The motion to
compel is DENIED insofar as Mr. Cormack seeks further documents or interrogatory responses
related to the “profits” or “costs of goods sold” for FSS products or related to the government’s
projected cost-savings by use of the FSS.
It is so ORDERED.
s/ Charles F. Lettow
Charles F. Lettow
Judge
19
The court notes that this subject may be a proper matter for deposition testimony by a
designee of Systems pursuant to RCFC 30(b)(6).
20
Systems’s motion for leave to file a sur-reply is also GRANTED.
18