Opinion
Case No. 16-cv-06050-LHK (SVK)
05-23-2019
X ONE, INC., Plaintiff, v. UBER TECHNOLOGIES, INC., Defendant.
***FILED UNDER SEAL***
ORDER GRANTING UBER'S MAY 10, 2019 MOTION TO COMPEL A FURTHER RESPONSE TO INTERROGATORY NO. 18 Re: Dkt. No. 135
I. INTRODUCTION
In this action, Plaintiff X One, Inc. ("X One") asserts that Defendant Uber Technologies, Inc. ("Uber") infringes U.S. Patent No. 8,798,593 ("the '593 Patent") and U.S. Patent No. 8,798,647 ("the '647 Patent"). In particular, X One alleges that Uber's app and Uber's ride-sharing, car-pooling and delivery services infringe the '593 and '647 Patents. See ECF 1.
Before the Court is one of five joint discovery letters filed by the Parties in recent weeks. ECF 133; ECF 135; ECF 139; ECF 144; ECF 145. This order addresses ECF 135 in which Uber seeks to compel X One to disclose its damages contentions and any underlying factual support based on information presently available to X One in response to Uber's Interrogatory No. 18. Id. at 2. Uber seeks this supplementation in two stages with X One providing the factual underpinnings of its damages claim at least one week before the depositions of X One's witnesses, and X One supplementing all remaining information at least one week before the fact discovery cutoff. Id. at 4. X One contends that its response identifies the type of damages it seeks and that it will consider if any further supplementation is necessary a week after Uber supplements its response to X One's Interrogatory No. 14 and Uber provides witnesses on certain Rule 30(b)(6) topics. Id. at 4-5.
Pursuant to Civil Local Rule 7-1(b), the Court finds this matter suitable for disposition without oral argument. As set forth below, the Court GRANTS Uber's motion to compel a further response to its Interrogatory No. 18.
II. UBER'S INTERROGATORY NO. 18
Uber's Interrogatory No. 18 asks X One to:
Identify all damages and/or injunctive or non-monetary relief that You are seeking based on any alleged infringement by Uber of the Patents-in-Suit, including an identification of each theory of damages, a specific calculation of monetary damages for each theory, all factual bases supporting each theory (including the identification of all documents and all persons on which X One will rely to support any claimed damages), and what forms of injunctive or nonmonetary relief You are seeking and the factual bases for them.ECF 134-2 at 4.
X One prefaces its response to Uber's Interrogatory No. 18 by noting several objections, including that it prematurely seeks expert testimony and that discovery is ongoing. Id. X One's response then identifies the category of damages it seeks—"a reasonable royalty for Uber's infringement of" the '593 and '647 Patents. Id. X One notes generally that "[a] reasonable royalty is the payment for a license that would have resulted from a hypothetical negotiation between the patent holder and the infringer taking place at the time when the infringing activity began." Id. However, X One does not provide any specific information regarding the negotiation beyond outlining some general considerations: (1) "the factors identified in Georgia Pacific Corp., v. United States Plywood Corp., 318 F. Supp. 1116 (S.D. N.Y. 1970);" (2) "Uber's infringement began on August 5, 2014 (the date the '593 and '647 Patents issued) and continues to the present day;" (3) "[t]he parties to the hypothetical negotiation would include X One and Uber;" (4) the reasonable royalty is "calculated as a percentage of Uber's bookings from the Accused Instrumentalities or as a per-transaction fee;" and (5) a royalty should also consider "the value of the infringing products and services to Uber's business as contrasted with products and services that do not infringe the asserted claims of X One's patents" and "the value of the patented features to Uber's business." Id. at 4-5.
Uber argues that X One's response only provides general assertions regarding its intention to seek damages based on a reasonable royalty. ECF 135 at 2. In particular, Uber identifies eleven pieces or categories of information that X One's response lacks, such as the total amount of royalties, the calculations behind that amount, the royalty base and the royalty rate. Id. at 2-3. Uber contends that X One has had sufficient time and discovery to provide these details and quantify its damages claims. Id. at 3. Uber further argues that X One's demand for additional discovery prior to supplementing its response is unjustified given that "Uber substantially completed its production of financial and marketing documents on April 9, 2019." Id.
X One argues that at this stage of the proceedings it only needs to provide the theories under which it intends to seek damages. Id. at 4. Specifically, X One has "provided a preliminary damages calculation of a 5% reasonable running royalty on Uber's gross bookings." Id. X One further argues that time for additional discovery or the opportunity to cross-examine witnesses on X One's damages theory is not necessary because any damages calculation will rely on information in Uber's or their witnesses' possession—not X One's. Id. Relatedly, X One alleges that Uber's failure to produce witnesses as well as an adequate response to X One's Interrogatory No. 14 prevents X One from further supplementing its response. Id. at 4-5.
X One's complaints regarding Uber's alleged discovery failures are set forth in separate joint discovery letters. ECF 139; ECF 145.
III. DISCUSSION
The Patent Local Rules were amended as of January 2017, to address the disclosure of damages information. Local Rule 3-8 requires that a plaintiff "[i]dentify each of the category(-ies) of damages it is seeking for the asserted infringement, as well as its theories of recovery, factual support for those theories, and computations of damages within each category." L.R. 3-8(a). X One served its damages contentions pursuant to L.R. 3-8 on May 25, 2017, and Uber's Interrogatory No. 18 seeks similar information to L.R. 3-8. ECF 134-2 at 4. As a result, L.R. 3- 8's disclosure requirements for a plaintiff's damages contentions directs X One's obligations to respond to Interrogatory No. 18. X One's updated damages contentions will inform both Uber and the Court in managing discovery disputes going forward, particularly as the Parties begin expert discovery. X One's response to Interrogatory No. 18 identifies the category of damages it seeks: a reasonable royalty rate. Id. Thus, the question before the Court is what additional disclosure obligations, if any, does X One have beyond identifying its theory of damages.
All references to the Local Rules are references to the Northern District of California Patent Local Rules and are hereinafter indicated by "L.R."
It was not clear from the Parties' joint discovery letter whether X One had served damages contentions in this case. Pursuant to a Court inquiry, X One submitted its May 25, 2017 damages contentions for the Court's review.
In Twilio, Inc. v. Telesign Corp., this Court found that after the plaintiff has had a sufficient opportunity to conduct discovery, L.R. 3-8 requires the plaintiff to provide "a reasonable good faith computation of damages." No. 16-cv-6925 LHK SVK, 2017 WL 5525929, at *5 (N.D. Cal. Nov. 17, 2017). And where the plaintiff seeks a reasonable royalty, that computation must identify (1) the royalty base(s); (2) the royalty rate(s); (3) the date(s) of the hypothetical negotiation currently used; and (4) the factors identified to date that are or will be used in apportionment and where possible a quantification of those factors. Id. The plaintiff's initial damages contentions may not include such detailed information, but it "is not credible that a full year after the filing of the complaint, which certainly followed a diligent investigation, a plaintiff is unable to quantify, with reasonableness if not certainty, the damages it will seek at trial." Id. at *3. The Court further noted, as it does here, that L.R. 3-8 does not replace "the robust analysis of a patent damages expert report." Id. at *2. And neither does an interrogatory response.
Nevertheless, X One's response to Uber's Interrogatory No. 18 falls short. The response only identifies that X One seeks a reasonable royalty. ECF 134-2 at 4. X One's statement in the Parties' joint discovery letter gets closer to meeting its disclosure requirements. There, X One states that it seeks "a 5% reasonable running royalty on Uber's gross bookings." ECF 135 at 4. This response does not disclose an estimate of the total damages X One seeks or any apportionment factors, so even X One's more complete response in the joint discovery letter fails to provide a reasonable good faith computation of damages. Accordingly, X One must amend its response to Uber's Interrogatory No. 18 to identify, based upon the information available to it at this time, its (1) theory of damages; (2) royalty rate; (3) royalty base; (4) apportionment factors; (5) supporting witnesses and documents; and (6) any non-monetary relief.
IV. CONCLUSION
For the foregoing reasons, by May 29, 2019, X One shall supplement its response to Interrogatory No, 18 to identify the following:
• X One's theory of damages. X One's original response identifies that X One seeks a reasonable royalty, so X One shall include this theory in its verified supplemental response.
• The key components of each theory of damages. Here, X One seeks a reasonable royalty, so X One must identify a royalty rate, royalty base and the key factors it has identified to date to be used in its apportionment analysis.
? X One identified its royalty rate, a 5% running royalty, but it must amend its response to include that information.
? X One also generally identified the rate base, Uber's gross bookings, but X One must identify a numerical value for this base to the best of its abilities. X One appears to have enough information to estimate this rate base, in part because the Court previously ordered Uber to supplement its response to X One's Interrogatory No. 14 by May 17, 2019. ECF 141. However, if Uber's supplemental response still omits data for 2014 or does not contain the information necessary for X One to estimate the rate base, X One shall (1) provide its best estimate for the rate base and (2) indicate what information it is missing and how that it anticipates that information will affect its rate base calculation.
? X One must also identify the factors identified to date that are or will be used in apportionment and where possible a quantification of those factors.
• The witnesses and documents that support its responses for each foregoing subpart.
• The non-monetary relief that X Ones seeks at this juncture, if any.
The Court notes that this joint dispute was brought to Court's attention on May 10, 2019, along with several other disputes this month. Therefore, X One's supplemental response is due May 29, 2019; Uber may seek further relief regarding additional discovery it claims it will need, no later than seven days after the close of fact discovery (in compliance with the Court's Civil Scheduling and Discovery Standing Order). However, the Court notes that X One's May 25, 2017 damages contentions provide much of the information that Uber now seeks through its motion to compel; therefore, a motion seeking further discovery arising out of X One's supplemental response to Interrogatory No. 18 must identify the specific updated information that forms the basis of Uber's request. Further, Uber is to be informed by the Court's order in Twilio—in particular that this is not yet the time for expert discovery. See 2017 WL 5525929, at *2.
The Court's standing orders are available at https://www.cand.uscourts.gov/svkorders. --------
SO ORDERED. Dated: May 23, 2019
/s/_________
SUSAN VAN KEULEN
United States Magistrate Judge