Hitkansut LLC v. United States

In the United States Court of Federal Claims
No. 12-303C
(Filed: October 21, 2014)
********************************** )
) Patent case; motions to compel the
HITKANSUT LLC, a Michigan ) production of documents from a CRADA
corporation, & ACCELEDYNE ) partner of the government and from one of
TECHNOLOGIES, LTD., LLC, a ) the government’s national laboratories;
Michigan corporation, ) RCFC 26(b)(1)-(2), (g)(1); application of
) “proportionality” considerations to
Plaintiffs, ) plaintiff’s discovery requests; “classified”
) documents
v. )
)
UNITED STATES, )
)
Defendant. )
)
**********************************
John S. Artz, Dickinson Wright, PLLC, Troy, Michigan, for plaintiffs. With him on the
briefs were John A. Artz, Bryan J. Schomer, and Franklin M. Smith, Dickinson Wright, PLLC,
Troy, Michigan.
Gary L. Hausken, Assistant Director, Commercial Litigation Branch, Civil Division,
United States Department of Justice, Washington, D.C., for defendant. With him on the briefs
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.
Barbara L. Mandell, Rader, Fishman & Grauer PLLC, Bloomfield Hills, Michigan, for
Eaton Corporation. With her on the briefs were Robert J. Kimmer and Michael B. Stewart,
Rader, Fishman & Grauer PLLC, Washington, D.C. and Bloomfield Hills, Michigan,
respectively.
OPINION AND ORDER
LETTOW, Judge.
Pending before the court are four motions reflecting disputes over pre-trial discovery in
this patent case. The parties have been pursuing discovery to prepare for a potential future trial
over whether the government, acting through Oak Ridge National Laboratory (“Oak Ridge” or
“the government”), has infringed United States Patent No. 7,175,722 (“the ’722 patent”), entitled
“Methods and Apparatus for Stress Relief Using Multiple Energy Sources.” In the first motion,
plaintiffs Hitkansut LLC and Acceledyne Technologies, Ltd., LLC (collectively, “Hitkansut”)
request that the court compel the production of certain documents and information currently
being withheld by Eaton Corporation (“Eaton”), which previously had entered into Cooperative
Research and Development Agreements (“CRADAs”) with Oak Ridge. Pls.’ Mot. to Compel
Docs. from Third-Party Eaton Corporation (“Pls.’ Eaton Mot.”), ECF No. 65; see also Hitkansut
LLC v. United States, 111 Fed. Cl. 228 (2013) (“Hitkansut I”) (addressing provisions of the
Federal Technology Transfer Act, 15 U.S.C. § 3710a(c)(7), establishing a privilege against and
protection from disclosure for qualifying trade secrets or commercial or financial information).1
Hitkansut’s second motion asks the court to compel the government to produce the results, data,
and reports associated with the operation of the allegedly infringing process by Oak Ridge. Pls.’
Mot. to Compel Production of Docs. from the Def. (“Pls.’ Data Mot.”), ECF No. 77. Hitkansut’s
third motion seeks to compel the discovery of “classified” information pertaining to specific
projects conducted at Oak Ridge. Pls.’ Mot. to Compel Discovery Relating to “Classified”
Information (“Pls.’ Classified Mot.”), ECF No. 76. Finally, in its fourth motion, Hitkansut
requests that the court extend the deadline for completion of fact discovery. Pls.’ Mot. to Extend
the Close of Fact Disc. (“Pls.’ Enlargement Mot.”), ECF No. 79. All four motions are fully
briefed and accordingly are ready for disposition.2
BACKGROUND
The invention protected by the ’722 patent is “a method of achieving a desired physical
property in a structure . . . through the concurrent application of two different energies . . .
1
A CRADA is defined by statute as
[A]ny agreement between one or more [f]ederal laboratories and one or
more non-[f]ederal parties under which the [g]overnment, through its
laboratories, provides personnel, services, facilities, equipment, intellectual
property, or other resources with or without reimbursement (but not funds
to non-[f]ederal parties) and the non-[f]ederal parties provide funds, personnel,
services, facilities, equipment, intellectual property, or other resources toward
the conduct of specified research or development efforts which are consistent
with the missions of the laboratory; except that such term does not include a
procurement contract or cooperative agreement as those terms are used in
sections 6303, 6304, and 6305 of Title 31.
15 U.S.C. § 3710a(d)(1).
2
The court previously has construed disputed claim terms of the ’722 patent, see
Hitkansut LLC v. United States, 114 Fed. Cl. 410 (2013) (“Hitkansut II”), and ruled that some
claims were invalid on patentability grounds per 35 U.S.C. § 101, see Hitkansut LLC v. United
States, 115 Fed. Cl. 719 (2014) (“Hitkansut III”). In entering the latter order, the court noted that
the government had a nascent defense that the remaining claims in the ’722 patent were invalid
under 35 U.S.C. § 112, relating to indefiniteness. 115 Fed. Cl. at 734 n.17. Subsequently, on
August 11, 2014, the government filed a Motion for Summary Judgment of Invalidity of U.S.
Patent No. 7,175,722 pursuant to 28 U.S.C. § 112, ECF No. 80. Briefing on that motion has just
been completed, and a hearing on the motion will be scheduled shortly.
2
[where t]he first energy may be thermal energy (i.e. heat) and the second energy may be
mechanical vibration, sonic, laser, microwave, or magnetic energy.” Pls.’ Mot. to Compel & for
Entry of a Protective Order at 1-2, ECF No. 11.3 Hitkansut claims that the research conducted by
Oak Ridge and by private entities through their contractual CRADAs with the government
employs a thermomagnetic processing method that infringes the ’722 patent. Id. at 2-3. The
government disputes these claims.
After the suit progressed into the discovery phase, on January 28, 2013, Hitkansut moved
pursuant to Rule 37(a) of the Rules of the Court of Federal Claims (“RCFC”) to compel the
production by the government of information related to the CRADAs which were entered by the
government with private partners. Pls.’ Mot. to Compel & for Entry of Protective Order.
Hitkansut additionally requested that the protective order allow Hitkansut’s principal access to
protected information. Id. at 3. The court granted the motion in part and denied it in part.
Specifically, the court allowed the government to withhold information privileged under the
Federal Technology Transfer Act, 15 U.S.C. § 3710a(c)(7), including technical information and
commercial projections, but required the government to supply Hitkansut with a privilege log
identifying the withheld documents. Hitkansut I, 111 Fed. Cl. at 237, 239. In addition, the court
required the government to provide Hitkansut with the non-privileged contents of its CRADA
agreements, but denied Hitkansut’s principal access to the material produced pursuant to the
protective order. Id. at 239-40. In upholding the government’s privilege claim, the court noted
that “[t]he government submits that the privilege provided by [15 U.S.C. §] 3710a(c)(7)(A) only
pertains to governmental disclosure of private-party information and does not necessarily shelter
from disclosure information in the hands of third parties.” Id. at 235 n.7.
Hitkansut subsequently sought from Eaton discovery of information relating to its
CRADAs with Oak Ridge by way of a subpoena duces tecum and a subpoena for a deposition of
Eaton, served April 17, 2014. See Pls.’ Eaton Mot.4 On June 19, 2014, after Eaton objected to
3
In its complaint, Hitkansut limits its claims against the government to those specifically
involving a thermo-magnetic process that uses magnets in combination with heat. Compl. ¶ 34.
Among other things, staff at Oak Ridge conducted extensive research in that area and filed a
patent application in April 2005 entitled “Thermal and High Magnetic Field Treatment of
Materials and Associated Apparatus.” Compl. ¶ 23 (referring to U.S. Pat. App. 2006/0231549).
On January 9, 2007, U.S. Patent No. 7,161,124 was issued based upon this application.
4
The subpoena specifically requested the following information:
1. All documents withheld by the Government at the request of Eaton in the underlying
litigation, which are identified in the attached privilege log.
2. Funding, whether in-kind contributions or monetary contributions, from Eaton to
[Oak Ridge] or from [Oak Ridge] to Eaton relative or pertaining to Eaton’s use of the
thermo-magnetic process.
3. Eaton’s internal investment and/or use relative or pertaining to Eaton’s use of the
thermo-magnetic process.
4. Eaton’s first knowledge and use of the thermo-magnetic process.
3
Hitkansut’s requests and refrained from producing the requested documents, Hitkansut filed a
motion under RCFC 37(a) requesting that the court order production. Id. In its motion,
Hitkansut describes the requested documents as those relating to CRADAs that “outline the
research that is to be and was conducted, the deliverables associated with the research, . . . the
source and amount of funding provided to the government agency, and the results and
conclusions generated by the research.” Id. at 2. Hitkansut maintains that the requested
information relates to the validity and infringement of the ’722 patent and to damages. Id. at 7-8.
Eaton opposes Hitkansut’s request, arguing that Hitkansut is not entitled to the requested
information because it is confidential and concerns activities that Eaton conducted independently
of the government. Eaton Company’s Brief in Opp’n to Pls.’ Mot. to Compel Docs. (“Eaton’s
Opp’n”) at 1, ECF No. 66. The government supports Eaton’s position, emphasizing that Eaton is
not a party to this litigation between Hitkansut and the government and is entitled to significant
protection from discovery. See Views of the United States in Support of Non-Party Eaton
Company’s Opp’n to Pls.’ Mot. to Compel Production (“United States’s Views”) at 1-2, ECF
No. 67. The government additionally avers that it has already provided to Hitkansut much of the
information that it requests from Eaton. Id. at 2.
On July 30, 2014, one day before discovery was set to close on July 31, 2014, Hitkansut
filed three additional discovery motions pursuant to RCFC 37(a). The first motion requests that
the court compel the production from the government of all records and electronic data
“concerning the design, development, creation, operation, and/or steps” and all “documents and
things” involving the processing of materials and testing of the allegedly infringing process.
Pls.’ Data Mot. at 2. The government opposes, arguing that Hitkansut’s motion is untimely and
that the requested items are irrelevant to plaintiffs’ infringement action. Resp. of the United
States to Pls.’ Mot. to Compel Production of Docs. from the Def. (“Def.’s Data Opp’n”) at 1-2,
ECF No. 84. Hitkansut’s second motion requests the court to compel the government to divulge
5. Any other source of funding, grant, revenue[,] or other compensation exchanged
between [Oak Ridge] and Eaton, or any other third party and Eaton, relative or
pertaining to Eaton’s use of the thermo-magnetic process.
6. The contract or contracts defining the relationship between Eaton and [Oak Ridge],
and any other documents which describe or define the relationship between Eaton
and [Oak Ridge], including Cooperative Research and Development Agreements
(CRADA[]s) and any other work for others agreement [sic] relative or pertaining
to Eaton’s use of the thermo-magnetic process.
7. Any Eaton internal report or evaluation, including commercial evaluations and/or
commercial potential and/or use, relative or pertaining to Eaton’s use of the thermo-
magnetic process.
8. Acquisitions of any equipment or supplies, such as superconducting magnets, high
magnetic field generating magnets and devices, and the like relative or pertaining to
Eaton’s use of the thermo-magnetic process.
9. Documents or summaries sufficient to show or reflecting Eaton’s knowledge and
evaluation of U.S. Patent No. 7,175,722.
Pls.’ Eaton Mot. Ex. A, at 4-5.
4
to Hitkansut information regarding supposedly “classified” projects on a list prepared by
Dr. Gerard Ludtka, an Oak Ridge group leader and Principal Investigator. Pls.’ Classified Mot.
Hitkansut expresses doubt that the information sought is truly classified and asserts that even if
the projects are properly classified, the government may nonetheless disclose relevant, non-
classified information regarding whether the allegedly infringing process was used in treating
materials in connection with those projects. Id. at 1, 9. The government insists that some of the
projects do not involve thermo-magnetic energy sources and are therefore irrelevant and that the
remaining projects are properly classified and should accordingly be protected from disclosure.
Response of the United States to Pls.’ Mot. to Compel Discovery Relating to Classified Info.
(“Def.’s Classified Opp’n”) at 1-2, 8-10, ECF No. 81. Finally, in its third motion, Hitkansut
requests an extension of time within which to complete discovery. Pls.’ Enlargement Mot. The
government urges the court to deny the extension on the grounds that Hitkansut refused to
negotiate the length of time of the enlargement and failed diligently to pursue discovery during
the original discovery period. Response of the United States to Pls.’ Mot. to Extend the Close of
Fact Discovery (“Def.’s Enlargement Opp’n”) at 1-2, ECF No. 85.
ANALYSIS
Under Rule 37(a)(1), a party may, “[o]n notice to other parties and all affected persons,
. . . move for an order compelling disclosure or discovery.” RCFC 37(a)(1). In acting on a
motion to compel discovery responses, the court exercises discretion, see, e.g., Schism v. United
States, 316 F.3d 1259, 1300 (Fed. Cir. 2002) (en banc); Osage Tribe of Indians of Okla. v.
United States, 84 Fed. Cl. 495, 497 (2008), guided by the provisions of Rule 26(b)(2) and Rule
26(g)(1). Those rules set out “proportionality” considerations that bear on disputed discovery
requests, calling for a balancing of burdens, the needs of the case, and the importance of the
proposed discovery in resolving the issues in the case. 7 James Wm. Moore et al., Moore’s
Federal Practice § 37.22[2][a] (3d ed. 2012). Rule 26(b) authorizes “discovery regarding any
nonprivileged matter that is relevant to any party’s claim or defense,” RCFC 26(b)(1), but
discovery can be limited where
(i) the discovery sought is unreasonably cumulative or duplicative, or
can be obtained from some other source that is more convenient, less
burdensome, or less expensive;
(ii) the party seeking discovery has had ample opportunity to obtain the
information by discovery in the action; or
(iii) the burden or expense of the proposed discovery outweighs its likely
benefit, considering the needs of the case, the amount in controversy,
the parties’ resources, the importance of the issues at stake in the action,
and the importance of the discovery in resolving the issues.
RCFC 26(b)(2)(C). Rule 26(g)(1) indicates that a discovery request should
(ii) not [be] interposed for any improper purpose, such as to harass, cause
unnecessary delay, or needlessly increase the cost of litigation; and
5
(iii) neither [be] unreasonable nor unduly burdensome or expensive,
considering the needs of the case, prior discovery in the case, the amount
in controversy, and the importance of the issues at stake in the action.
RCFC 26(g)(1)(B).5
A. Discovery from Nonparty Eaton
Hitkansut contends that the documents it requests from Eaton regarding its CRADAs
with the government are “highly relevant” to several issues in its infringement case, including “a
determination of the amount of compensation owed for any infringement, the commercial
success of the patented process, and the validity of [the ’722 patent].” Pls.’ Eaton Mot. at 2-3.
First, Hitkansut claims that information regarding Eaton’s internal analysis of the commercial
value of the allegedly infringing process, and the amount of time, effort, and money, expended
by Eaton relative to the process, “directly reflects the value and worth of the patented process.”
Id. at 7. Hitkansut additionally asserts, without elaboration, that the requested documents
relating to commercial success and awards received by those conducting the research are
relevant to nonobviousness and therefore the validity of the ’722 patent. Id. at 7-8. Finally,
Hitkansut argues that because Eaton worked closely with Oak Ridge, Eaton “would have highly
relevant facts, documents[,] and information” relating to the ’722 patent. Id. at 8.
In American Standard Inc. v. Pfizer Inc., 828 F.2d 734 (Fed. Cir. 1987), the Federal
Circuit addressed the similar circumstance of a patentee seeking discovery of data from a
nonparty allegedly participating in infringement. In affirming the district court’s denial of the
discovery sought, the court held that the district court did not abuse its discretion because the
patentee failed to carry its burden of showing some relationship between infringement of the
invention claimed in its patent and the confidential sales figures of the nonparty. Id. at 741-44.
Similarly, in Micro Motion, Inc. v. Kane Steel Co., 894 F.2d 1318 (Fed. Cir. 1990), a
patent owner issued a subpoena seeking to obtain documents from a nonparty that were
supposedly relevant to the issue of damages in its underlying patent infringement lawsuit. 894
F.2d at 1319. The district court ordered the disclosure of all of the information requested from
the nonparty except the names of the nonparty’s customers. Id. at 1320. The Federal Circuit
overturned the district court’s decision, concluding that the motion to quash the subpoena should
have been granted in its entirety. Id. at 1320. The court of appeals commented that “[a] party to
litigation has no absolute right to pursue any and every alternative theory of damages, no matter
how complicated or tenuous.” Id. at 1324. It reasoned that for the requested documents to be
relevant, the patent owner must present its damage theories and establish that “each theory [is]
actually [a] subject matter involved in the pending action.” Id. at 1326-7 (emphasis in original)
(internal quotation marks omitted). The court observed that because the patent owner did not sue
5
RCFC 26(b) and (g) mirror Fed. R. Civ. P. 26(b) and (g). See System Fuels, Inc. v.
United States, 73 Fed. Cl. 206, 215 (2006); see also RCFC 26, Rules Committee Notes, 2002,
2007, 2008, 2011, and 2012 revisions. The court accordingly will look to precedents applying
Fed. R. Civ. P. 26 as well as those concerning RCFC 26.
6
the nonparty alleging infringement, the nonparty’s infringement was not properly a subject
matter involved in the underlying lawsuit. Id. at 1327-28.6
In this instance, Hitkansut has neither offered a specific damages theory to which the
requested documents would be relevant nor charged Eaton itself with infringement.7 Given that
Eaton has not developed any commercial application of the development work it undertook with
Oak Ridge, Eaton’s Opp’n at 14, even Eaton’s expenditures would have little if any relevance to
Hitkansut’s case against the government.8 Hitkansut similarly has offered no specific support for
its assertion that Eaton’s documentation would help it rebut a claim of patent invalidity due to
obviousness.
In effect, much of the information Hitkansut seeks from Eaton would be of potential use
in building an infringement case against Eaton and other third parties. Notably, in its subpoena,
6
Hitkansut insists that American Standard and Micro Motion are not applicable to the
factual circumstances of this case and instead relies on the decision in Truswal Sys. Corp. v.
Hydro-Air Engineering, Inc., 813 F.2d 1207 (Fed. Cir. 1987). See Reply Brief in Support of
Pls.’ Mot. to Compel Docs. from Nonparty Eaton Co. (“Pls.’ Eaton Reply”) at 3, ECF No. 72.
Hitkansut asserts that in Truswal, the Federal Circuit allowed discovery of sales documents from
a nonparty competitor. Id. That summation overstates the holding of the decision. The Court of
Appeals instead remanded the case, requiring that the district court articulate the reasons
indicating that disclosure would be unreasonable. Truswal, 813 F.2d at 1213 (“If the district
court on reconsideration remains of the view that an order to quash is appropriate, it must
provide an articulation of reasons why disclosure of the sales information sought under a suitable
protective order would be unreasonable and oppressive.”). The court declined to develop and
impose a protective order that might be suitable and protective of the competitor’s sales
information. Id.7
Hitkansut states, “Traditional forms of patent damages include lost profits, price erosion,
and reasonable royalties,” but observes that because the government is not making or selling a
product but rather conducting research for itself and with nonparties, “a reasonable royalty would
be based on other matters, such as predictions, expectations, and valuations by others, as well as
the money utilized by [Oak Ridge] on the research.” Pls.’ Eaton Reply at 8. Rather than
offering a specific theory of calculating damages, Hitkansut implies that it plans to rely at least in
part on Eaton’s valuation of the allegedly infringing process. Id. However, Eaton’s independent
valuation has little bearing on damages in Hitkansut’s lawsuit against the government.
8
Hitkansut acknowledges that Eaton has stopped all of its thermo-magnetic research and
development activities in the metal processing area both respecting its own use and those relating
to CRADAs with Oak Ridge. Pls.’ Resp. to the Def.’s “Views” Relative to Pls.’ Mot. to Compel
Production of Docs. from Eaton Company (“Pls.’ Eaton Resp.”) at 6, ECF No. 74. Hitkansut
further declares that “[s]ince Eaton has indicated that it is no longer working on this matter,
either with [Oak Ridge] or on its own, the documents and information relate to ‘old’ or ‘dead’
issues at Eaton.” Pls.’ Eaton Reply at 12. Finally, Hitkansut emphasizes that Eaton and
Hitkansut are not competitors and Eaton’s main business interests are as a supplier of automotive
components rather than processing materials. Pls.’ Eaton Resp. at 5; see also Pls.’ Eaton Reply
at 2-3.
7
Hitkansut requested “any . . . source of funding, grant, revenue[,] or other compensation
exchanged between [Oak Ridge] and Eaton, or any other third party and Eaton, relative . . . to
Eaton’s use of the thermo-magnetic process.” Pls.’ Eaton Mot. Ex. A, at 4 (emphasis added).
Hitkansut also demanded information about Eaton’s acquisitions of equipment and supplies
relating to its use of the thermo-magnetic process as well as documents “sufficient to show or
reflecting Eaton’s knowledge and evaluation of [the ’722 patent].” Id. at 5. The court’s
subpoena power may not be used to help the plaintiffs bring an infringement action against
nonparties. As the court in Micro Motion observed, “the discovery rules are designed to assist a
party to prove a claim it reasonably believes to be viable without discovery, not to find out if it
has any basis for a claim.” 894 F.2d at 1327 (emphasis in original). Correlatively to Micro
Motion, Eaton’s potential infringement is not a subject matter of Hitkansut’s infringement case
against the government. Id. (“[Micro Motion] has studiously refrained from charging [the
nonparty] with infringement. We conclude that [the nonparty’s] infringement is not, on this
record, shown to be subject matter involved in the [underlying infringement] suit.”). In sum,
Hitkansut is not entitled to discovery regarding Eaton’s research and development activities in an
effort to determine whether other parties have been infringing its patent.
Even if the information sought were relevant, discovery is not permitted where “the
burden or expense of the proposed discovery outweighs its likely benefit, considering the needs
of the case . . . and the importance of the discovery in resolving the issues.” RCFC
26(b)(2)(C)(iii). The court in its determination of whether to allow discovery must balance need
against burden, confidentiality, and harm. See Mannington Mills, Inc. v. Armstrong World
Indus., Inc., 206 F.R.D. 525, 529 (D. Del. 2002).
Hitkansut attempts to establish its need for the information from Eaton by stating that
denying Hitkansut access would “severely prejudice[]” its ability to evaluate the economic value
and details of the government’s alleged infringement. Pls.’ Eaton Mot. at 3. However, Hitkansut
fails to elaborate upon this blanket assertion or explain its need for information beyond the
200,000 images that the government has already provided. United States’s Views at 14.9
In contrast, Eaton has shown evidence of potential harm from disclosure. Earlier in this
litigation when Hitkansut moved to compel the government to disclose information from its
CRADA partners, Mr. John A. Kovacich, an Eaton employee, provided a declaration outlining
Eaton’s concerns. Resp. of the United States to Pls.’ Motion to Compel and for Entry of a
Protective Order at Appx. A35-38, ECF No. 12. Mr. Kovacich explained that the information
requested by Hitkansut at that point included Eaton-held trade secrets, technical know-how, and
business and commercial projections that would be valuable to potential future competitors. Id.at Appx. A36-37. The court in Hitkansut I stated that it accepted that technical information and
commercial projections “are commercial or financial information, and . . . this information is
confidential because it would not customarily be released publicly by a private CRADA partner.”
111 Fed. Cl. at 237.
9
While Hitkansut asserts that the specific documents requested from Eaton are not
available from another source, Pls.’ Eaton Reply at 10-11, it does not explain why information
beyond that produced by the government relating to the value and validity of the allegedly
infringing process is needed. There has been no showing that the government is responsible for
any infringing use Eaton may allegedly have made of the patented process.
8
It is also significant in assessing the burden on Eaton that Eaton is a nonparty. See
Solarex Corp. v. Arco Solar, Inc., 121 F.R.D. 163, 179 (E.D.N.Y. 1988) (noting that a party’s
status is significant in “determining whether compliance [with a discovery demand] would
constitute an undue burden.”) (quoting Dow Chemical Co. v. Allen, 672 F.2d 1262, 1271 (7th
Cir. 1982)). Hitkansut counters that “[t]he CRADA documents and information being sought
from Eaton are no different from confidential technical and financial information that is routinely
disclosed in patent infringement lawsuits under the protection afforded by protective orders.”
Pls.’ Eaton Mot. at 6. However, Hitkansut fails to account for the fact that the financial and
technical information is only “routinely disclosed” by a party, not a nonparty, in an infringement
lawsuit. As the court in Micro Motion observed, an entitlement to discover information
concerning each competitor’s business would allow a patentee “in virtually every infringement
suit, immediately [to] obtain discovery from all possible competitors by merely filing a
complaint asking for damages against one [competitor].” 894 F.2d at 1324-25. Requiring Eaton
to disclose its confidential technical and financial information under these circumstances would
constitute an undue burden.
In sum, Hitkansut has failed to establish that the information sought is relevant to its
infringement suit against the government or that, even if deemed relevant, its need outweighs the
burden disclosure would place on Eaton. Hitkansut’s motion to compel discovery responses
from Eaton consequently shall be denied.
B. Sanctions
Under Rule 37(a)(5), if a discovery motion is denied, the court must require the moving
party to pay the reasonable expenses of the opposing party, including attorneys’ fees. RCFC
37(a)(5).10 However, an exception obviates this requirement for payment of expenses if the
motion was “substantially justified” or “other circumstances make an award of expenses unjust.”
Id.Hitkansut requests that Eaton be sanctioned for the time and costs of preparing its motion
to compel on the grounds that that the positions taken by Eaton are frivolous, meritless, and in
bad faith. Pls.’ Eaton Mot. at 2, 8. Eaton counters that Hitkansut failed to establish a good faith
basis for an entitlement to sanctions against Eaton and asserts instead that Eaton should be
awarded expenses in defending against Hitkansut’s motion because (1) Hitkansut failed to confer
10
The rule states:
If the motion [for an order compelling disclosure or discovery] is denied, the
court may issue any protective order authorized under RCFC 26(c) and must,
after giving an opportunity to be heard, require the movant, the attorney filing
the motion, or both to pay the party or deponent who opposed the motion its
reasonable expenses incurred in opposing the motion, including attorneys’ fees.
But the court must not order this payment if the motion was substantially justified or
other circumstances make an award of expenses unjust.
RCFC 37(a)(5)(B).
9
meaningfully with Eaton before filing the motion; (2) Hitkansut failed to cite to the court
controlling Federal Circuit authority regarding nonparty subpoenas; and (3) overall Hitkansut
displayed bad faith in pursuing its subpoena against Eaton. Eaton’s Opp’n at 19.
The discovery motions at issue and Hitkansut’s actions fall within the exceptions to Rule
37(a)(5). The court’s decision in Hitkansut I expressly reserved the issue of whether Hitkansut
was entitled to third-party discovery from Oak Ridge’s CRADA partners, see 111 Fed. Cl. at 235
n.7, essentially inviting Hitkansut to seek discovery from the partners. Hitkansut’s actions were
therefore substantially justified, and the court declines to impose sanctions against either entity.
C. Discovery of Process Data from Oak Ridge
In its second motion, Hitkansut seeks discovery from the government of the results,
electronic data, and reports pertaining to Oak Ridge’s use of the allegedly infringing process.
Pls.’ Data Mot. at 1. Hitkansut argues that those results and data are relevant to its infringement
action because the information will provide proofs regarding terms of its patent claim, as
follows: (1) whether and to what degree physical properties of the tested structures and materials
were changed; (2) whether the applications of the thermal and magnetic energies were “first
order rate relationships;” (3) whether the total energy was above the activation energy of the
materials used; (4) how operational settings were selected and used; and (5) whether the “first
order rate relationships” of the energy processes were first-order Larson-Miller relationships. Id.
at 6-7.11 Hitkansut represents that production would not be burdensome because the majority of
the data requested was collected on LabView, a commercially available software program, and
can be produced in electronic form. Id. at 9.
The government bases its refusal to disclose the requested information on the grounds
that (1) the data that Hitkansut requests are not relevant to any of Hitkansut’s claims and are also
not reasonably calculated to lead to admissible evidence, and (2) Hitkansut’s motion to compel is
untimely because it was filed on the eve of the discovery deadline. Def.’s Data Opp’n at 2-3, 6.
Data relating to the government’s experimentation using thermo-magnetic processes are
both relevant and typically admissible. See, e.g., In re Gabapentin Patent Litig., 393 F. Supp. 2d
278, 287 (D.N.J. 2005) (“The manufacturing process and testing conducted on samples made
from that process are clearly relevant to the infringement inquiry.”). The requested data relate to
the government’s use of thermo-magnetic processes that arguably fall within the scope of the
’722 patent. Nonetheless, Oak Ridge already has admitted its use of thermo-magnetic processes,
and disclosure of specific results and data would be somewhat cumulative regarding
infringement.
Additionally, the timeliness of Hitkansut’s motion is problematic. While there is no
specified time for filing a motion to compel, see RCFC 37, “courts generally look[] to the
deadline for completion of discovery in considering whether a motion to compel has been timely
filed.” Days Inn Worldwide, Inc. v. Sonia Invs., 237 F.R.D. 395, 397 (N.D. Tex. 2006). A
11
This description presumes familiarity with the claim construction reflected in Hitkansut
II.
10
motion is timely when “filed sufficiently in advance of the discovery deadline . . . to allow it to
be heard by [the] court, and if granted, to allow the compelled discovery to be produced prior to
the deadline.” Id. at 398. Hitkansut filed its motion on July 30, 2014, almost two years after fact
discovery opened on September 4, 2012 and a single day before fact discovery was set to close.
Hitkansut could not have reasonably expected the court to hear the matter or the government to
produce the requested documents in a single day. Hitkansut has offered no explanation for its
delay, even though the government put Hitkansut on notice of its intention to withhold the
requested documents in November 2012. Def.’s Data Opp’n at 5.
For the foregoing reasons, the court denies Hitkansut’s motion, without prejudice to a
renewed showing of specific need, demonstrating a more apparent imbalance between need and
burden and a showing that the evident untimeliness was justified by circumstances.
D. Discovery of “Classified” Information from Oak Ridge
Hitkansut’s third motion petitions the court to compel Oak Ridge to disclose files and
documents which contain “[i]nformation and documents proving whether or not any of the
[projects subject to a security classification] utilize a non-classified patented method of applying
two energy sources to change the physical properties of materials in a faster manner.” Pls.’
Classified Mot. at 1. Hitkansut’s reply explains that it is asking the court only to require the
government to provide information on the processes used in and for the classified projects, not to
disclose the nature, captions, or sponsoring agencies of those projects. Pls.’ Reply Br. in Support
of Its Mot. to Compel Disc. Relating to “Classified” Info. (“Pls.’ Classified Reply”) at 3, ECF
No. 88.12 Even so, at several points in its briefing of this motion, Hitkansut contends that the
projects identified by the government are not validly subject to a security classification. Pls.’
Classified Mot. at 1. But, even assuming that the programs are appropriately classified,
Hitkansut emphasizes that the processes used to treat the materials involved would not
themselves be classified, especially given that the government has already anonymously
enumerated the projects and disclosed costs. Id. at 9; Pls.’ Classified Reply at 2.
The government’s response is two-fold. First, the government argues that the scope of
the discovery requested by Hitkansut exceeds the subject matter of its present action because
some of the projects employ operations other than the thermo-magnetic processes, which are
alleged in the Complaint to be the only infringing use by Oak Ridge of the ’722 patent. See
Def.’s Classified Opp’n at 9-10; see also Pls.’ Data Mot. Ex. A, at 4. Hitkansut’s request is
indeed overbroad, encompassing information on whether a “method of applying two energy
sources to change the physical properties of materials in a faster manner” was used in any of its
classified projects. Pls.’ Classified Mot. at 1. Although Hitkansut insists that “[b]roadly, the
claims of the ’722 patent relate to a process of concurrently using two different energies in a
certain manner to achieve a certain result,” Pls.’ Reply in Support of its Mot. to Compel
12
Specifically, plaintiffs request information regarding whether the projects involve
“treatment of materials to accelerate the rate in which physical properties, such as residual stress,
are changed” and whether “the process[] involve[s] use of (1) a superconducting magnet (or
other form of oscillation) and (2) an induction heater (or heat in any way).” Pls.’ Classified
Reply at 3.
11
Production of Docs. from the Def. at 1, ECF No. 87, Hitkansut’s Complaint limits its claims
against the government to those involving exclusively thermo-magnetic energy sources. Compl.
¶ 34. Therefore, the information requested relating to programs and projects using non-thermo-
magnetic energy sources is irrelevant and need not be disclosed.
With respect to certain Oak Ridge programs and projects employing a thermo-magnetic
processing method, the government maintains that the programs were properly classified and are
protected either by their classified designation or under the state-secrets privilege.13 To assert a
classified privilege, “the head of the pertinent government department must formally invoke the
privilege on behalf of the government.” Crater Corp. v. Lucent Technologies, Inc., 423 F.3d
1260, 1265 (Fed. Cir. 2005). The court must then, “after reviewing the declarations of
government officials” and considering the surrounding circumstances, determine whether
invocation of the privilege is appropriate. Id.14
The government has sufficiently demonstrated the proper classification of the identified
programs through the declaration of Mr. Christopher D. Poe, a senior classification official at
Oak Ridge, who confirmed that the programs are classified. Def.’s Classified Opp’n at Appx.
GA241-43. Notwithstanding this compelling support for the classified status of the projects, the
government has offered to provide for in camera review by the court of “summary declarations
of knowledgeable persons” about the programs. Id. at 21. In light of the procedural posture of
the case, however, the court finds that there is no reason to undertake that step at this time and
reserves that issue for consideration after the resolution of pending motions concerning invalidity
13
The government suggests that consideration of the state-secrets privilege be deferred,
Def.’s Classified Opp’n at 21-2, observing that the state-secrets privilege, which allows the
government to prevent discovery of information that would adversely affect national security, “is
not to be lightly invoked,” United States v. Reynolds, 345 U.S. 1, 7 (1953). If the state-secrets
privilege has been properly imprecated, “the role of the court is a limited one,” Tilden v. Tenet,
140 F. Supp. 2d 623, 626 (E.D. Va. 2000), such that “in exceptional circumstances courts must
act in the interest of the country’s national security to prevent disclosure of state secrets, even to
the point of dismissing a case entirely,” Mohamed v. Jeppesen Dataplan, Inc., 614 F.3d 1070,
1077 (9th Cir. 2010) (en banc) (citing Totten v. United States, 92 U.S. 105, 107 (1876)).
14
This is the first step in a tripartite analytical trial process identified by the Fourth Circuit
for judicially addressing a claimed state-secrets privilege:
At the outset, the court must ascertain that the procedural requirements for
invoking the state secrets privilege have been satisfied. Second, the court
must decide whether the information sought to be protected qualifies as
privileged under the state secrets doctrine. Finally, if the subject information
is determined to be privileged, the ultimate question to be resolved is how the
matter should proceed in light of the successful privilege claim.
El-Masri v. United States, 479 F.3d 296, 304 (4th Cir. 2007); see also McDonnell Douglas Corp.
v. United States, 323 F.3d 1006, 1021-24 (Fed. Cir. 2003) (explicitly recognizing the first and
second analytical steps, and inherently applying the third step).
12
pursuant to 35 U.S.C. § 112. See supra, at 2 n.2. Accordingly, the court need not now reach the
issue of the state-secrets privilege. See Al-Aulaqui v. Obama, 727 F. Supp. 2d 1, 53 (D.D.C.
2010) (noting that the court should not reach the state-secrets privilege “if the case can be
resolved on . . . other grounds”).
CONCLUSION
For the reasons stated, plaintiffs’ motion to compel documents from Eaton is DENIED.
Plaintiffs’ motions to compel the production of documents from the government and to compel
the disclosure of classified information are also DENIED. Plaintiffs’ motion for an enlargement
of time to complete factual discovery is GRANTED. The parties shall complete factual
discovery on or before November 17, 2014.
It is so ORDERED.
s/ Charles F. Lettow
Charles F. Lettow
Judge
13