United States District Court, N.D. California
DISCOVERY ORDER Re: Dkt. No. 48
MARIA-ELENA JAMES, Magistrate Judge.
Pending before the Court is the parties' Joint Discovery Dispute Letter, filed July 18, 2014. Jt. Ltr., Dkt. No. 48. In the joint letter, Plaintiff BrightEdge Technologies, Inc. ("BrightEdge") seeks an order compelling Defendants Searchmetrics GmbH ("SG") and Searchmetrics, Inc. ("SI") (collectively "Searchmetrics") to respond to interrogatories and requests for production that seek information Searchmetrics claims it must withhold on the basis of international privacy protection. Jt. Ltr. at 1. Searchmetrics requests an order from the Court finding that it need not produce "personal data" in violation of German and EU privacy laws or delay production until a need for such "personal data" is shown. Id.
BrightEdge provides search engine optimization ("SEO") and analytical tools. Id. BrightEdge has accused Searchmetrics of infringing five U.S. patents related to SEO technology. Id. SG is a German limited liability company with its principal place of business in Berlin, Germany. Id. SI is a Delaware corporation with its principal place of business in San Mateo, California and is the U.S. subsidiary of SG. Id. SI is a wholly owned subsidiary of its German parent, SG. Jt. Ltr. at 3. SI offers SG's SEO products in the United States. Id.
Since SG was founded in Germany, its documents and email communications are held there. Id. When SI was created, its documents and emails were, and continue to be, held in Germany on the same server as that which stores SG's data. Id. at 3-4. Consequently, Searchmetrics contends that privacy laws regarding personal data held in Germany and the EU apply to the transfer of SI's e-mails, documents, and data. Id. Further, Searchmetrics argues that if it were required to produce "personal data" in this litigation, Searchmetrics would be forced to violate several German and EU privacy laws and could be subject to criminal penalties including substantial fines and/or jail time. Id.
On May 14, 2014, BrightEdge served Requests for Production ("RFP") and Interrogatories on Searchmetrics. Id. at 3. Searchmetrics responded on June 16, 2014. Id. Among other objections, Searchmetrics asserted the following objection to the entire set of interrogatories and all but one RFP: "To the extent BrightEdge seeks personal data and information held by Searchmetrics in Germany, Searchmetrics objects to production of [the] data and information to the extent such production would conflict with" German and European privacy laws. Id., Ex A at ¶ 15.
BrightEdge's position is that Searchmetrics should be compelled to produce the requested discovery for several reasons. First, the information sought is highly relevant to the issues in this case and is in the possession, custody and control of both SI and SG. Id. at 2. Second, the information is already available and actually in use in the U.S., rendering any foreign privacy laws inapplicable. Id. Third, even if the foreign privacy laws apply, balancing the relevant factors favors production since Searchmetrics uses this information in the U.S. to sell products and services to U.S. customers that are alleged to infringe U.S. patents. Id.
Searchmetrics contends that privacy laws regarding personal data held in Germany and the EU apply to its subsidiary SI's e-mails and other documents because that data is held in Germany. Id. at 2-3. It maintains that if it were required to produce "personal data" in this litigation, Searchmetrics would be forced to violate several German and EU privacy laws and could be subject to criminal penalties including substantial fines and/or incarceration. Id. at 3. Searchmetrics further asserts that any production of "personal data" should be delayed until after a finding that it has infringed a patent, or at least until the filing of potentially dispositive motions after claim construction. Id. at 4. Searchmetrics also argues generally that the requested discovery is overbroad, harassing, and fails to comply with the Northern District Model Order Regarding Discovery of Electronically Stored Information for Patent Cases ("Model Order"). Searchmetrics further suggests that the Court should require BrightEdge to establish infringement of valid patents before ordering them to produce "personal data" and other sensitive information. Id.
In determining whether the documents at issue are protected from disclosure under German and European Union law, the Court notes that "[t]he party relying on foreign law has the burden of showing such law bars production [of documents]." In re Air Crash at Taipei, Taiwan on Oct. 31, 2000, 211 F.R.D. 374, 377 (C.D. Cal. 2002) (citations omitted). However, even where a party seeks to prevent disclosure of documents based on a foreign law, "it is well settled that such [foreign] 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." Societe Nationale Industrielle Aerospatiale v. U.S. District Court, 482 U.S. 522, 544 fn 29 (1987) (citing Societe Internationale Pour Participations Industrielles et Commerciales, S.A. v. Rogers, 357 U.S. 197, 204-06 (1958)). Rather, courts employ a multi-factor balancing test set forth in the Restatement (Third) of Foreign Relations Law section 442(1)(c) to evaluate the interests of the United States and the party seeking the discovery against the foreign state's interest in secrecy. Aerospatiale, 482 U.S. at 543-44 fn 28. The relevant factors include:
(1) the importance to the... litigation of the documents or other information requested;
(2) the degree of specificity of the request;
(3) whether the information originated in the ...