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Diagnostic Systems Corp. v. Symantec Corp.

June 5, 2009

DIAGNOSTIC SYSTEMS CORP., PLAINTIFF,
v.
SYMANTEC CORP., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Arthur Nakazato United States Magistrate Judge

AND RELATED COUNTER-CLAIMS

MEMORANDUM AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT MICROSTRATEGY'S MOTION TO COMPEL MORE DEFINITE STATEMENT FROM PLAINTIFF DIAGNOSTIC SYSTEMS CORP. (dkt no. 606)

Having read and considered the parties' respective papers relating to the Motion, the Court found this matter was appropriate for disposition without a hearing. See Rule*fn1 78; Local Rule 7-15. Therefore, the previously stipulated hearing date of May 21, 2009, was vacated and the Clerk telephonically notified the parties that no appearances would be required.

1. The Parties' Contentions

Pursuant to Rules 26(e)(1)(A) and 37, as well as Local Rules 37-1 through 37-4, MicroStrategy moves for an order compelling Diagnostic Systems Corp. ("DSC") to provide a more definite infringement statement. (Motion at 3:5-11.)*fn2 MicroStrategy's moving contentions, which are set forth in the accompanying Joint Stipulation (dkt. #607) ("JS"), principally establish that MicroStrategy contends the claim charts in DSC's Preliminary Infringement Contentions ("PICs") for claims 1, 2, 4, 5, 6, and 8*fn3 of DSC's '590 Patent fail to set forth its theory of infringement with the requisite specificity even though DSC has been reviewing the source code for MicroStrategy's eight accused software products since June 2008 -- nearly one full year -- and has had executable copies and operating manuals for the accused products for about the same time. The alleged deficiencies with DSC's PICs are identified at pages 11 through 14 of the JS. DSC served its PICs on April 4, 2008, and DSC expressly represented the PICs would be updated with additional information after DSC reviewed the source code for MicroStrategy's accused software products. (JS at 10:1-11:9.) MicroStrategy further proffers that, in responding to an interrogatory that requests DSC to provide a detailed factual basis for its infringement claims (interrogatory no. 3), DSC referred to its PICs and further represented that it would supplement the claim charts for its PICs "following MicroStrategy's production of source code and following a reasonable period of time to review MicroStrategy's source code." (JS at 7:16-9:16.) MicroStrategy contends DSC has had more than a reasonable period of time to provide proper supplemental PICs, that DSC's failure to do so is inexcusable and violates a party's duty to supplement its Rule 26(a) disclosures, and that DSC should now be compelled to supplement its PICs with a relatively complete theory of infringement that identifies the infringing source code for each of its accused software products, where pertinent, as well as other detailed information, and that it should also be awarded its attorneys fees and costs in bringing its motion.

DSC opposes the Motion, principally contending that: (1) although its consulting expert has spent hundreds of hours diligently reviewing MicroStrategy's source code, the review has not been easy and hampered by alleged spyware; (2) MicroStrategy's Motion inappropriately attempts to invade the work-product privilege that protects DSC's consulting experts's opinions; on March 27, 2009, DSC served MicroStrategy with a supplemental answer to interrogatory no. 3 that incorporates its original PICs and provides updated claim charts addressing all of the so-called deficiencies with its original PICs ("updated PICs"); and (3) DSC would further supplement its PICs after it is allowed to take MicroStrategy's Rule 30(b)(6) deposition so DSC and its experts could formulate their positions. (JS at 16:1-23:5; DSC's Supp. Memo. (dkt. #664) at 1:1-28.) DSC asserts MicroStrategy's Motion should be denied and that it should be awarded its attorneys fees and costs.

2. Relevant Background

On July 23, 2007, the Court held its first Rule 26(f) scheduling conference in this case for the defendants served with DSC's original complaint. (7/23/07 Minute Order (dkt. #103).) MicroStrategy did not participate since it was not named as a co-defendant in DSC's original complaint. Nonetheless, during the initial 7/23/07 Rule 26(f) conference held on July 23, 2007, Judge Carter made some rulings that apply throughout these consolidated cases. One such ruling was to deny a request to adopt all of the Northern District of California's Local Patent Rules. Instead, Judge Carter chose a more focused approach to "rule as we go[,]" adopting only the specific local patent rules -- or the principles embodied by those rules -- based upon a perceived need. (7/23/07 Reporter's Transcript at 41:5-11.) Towards that end, and consistent with the spirit of Local Patent Rule 3-1,*fn4 Judge Carter issued a scheduling conference order that directed DSC to serve its PICs on the defendants that had been served with DSC's original complaint. (7/23/07 Minute Order.) In doing so, Judge Carter expressly ordered DSC to provide "definitive" claim charts for all accused "infringing devices . . . right off the bat," without any discovery or the benefit of source codes, so that DSC could not open "Pandora's box" and then decid[e] what [it would] file against a "universe" of products, thereby "letting the mouse drive the elephant." (7/23/07 Reporter's Transcript at 46:4-23.)

On November 8, 2007, DSC filed its consolidated first amended complaint ("FAC") (dkt. #224) that named MicroStrategy and other entities as co-defendants. On November 12, 2007, MicroStrategy was served with the FAC. (12/05/07 Proof of Service (dkt. #257).) The record does not indicate that a Rule 26(f) conference was held after MicroStrategy was served or that a Rule 26(f) order directing DSC to serve PICs on MicroStrategy was ever issued. However, consistent with Judge Carter's 7/23/07 Scheduling Order directing DSC to serve PICs on the defendants named in the original complaint, DSC undeniably served PICs upon MicroStrategy on April 4, 2008. On March 27, 2009, DSC served a supplemental answer to interrogatory no. 3 that incorporates the updated PICs as part of its answer. (Plaintiff's supplemental and/or amended objections and responses to MicroStrategy's interrogatories (dkt. #657-2 at 8, #657-3 at 1-22, #657-3 at 1-22, #657-4 at 1-23).)

DSC is a wholly-owned subsidiary of Acacia Research Corporation ("Acacia"), and both entities are in the business of acquiring, licensing, and enforcing patented technologies.

"DSC's only business is to analyze, investigate, and attempt to enforce the patents-in-suit[;...] DSC does not make any products and the patents are its only assets." (8/12/08 Order (dkt. # 558) at 3:16-18; 9:6-15.)

3. Analysis

Rule 26(e)(1) states: "[a] party who has made a disclosure under Rule 26(a) -- or who has responded to an interrogatory, request for production, or request for admission -- must supplement or correct its disclosure or response: (A) in a timely manner if the party learns that in some material respect the disclosure or response is incomplete or incorrect, and if the additional or corrective information has not otherwise been made known to the other parties during the discovery process or in writing; or (B) as ordered by the court." The Ninth Circuit recently explained:

Rule 26(e)(1)(A) requires disclosing parties to supplement their prior disclosures "in a timely manner" when the prior response is "incomplete or incorrect." Rule 37(c)(1) gives teeth to these requirements by forbidding the use at trial of any information ...


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