United States District Court, D. Nebraska
ONLINE RESOURCES CORPORATION and ACI WORLDWIDE, INC., Plaintiffs,
JOAO BOCK TRANSACTION SYSTEMS, LLC, Defendant. JOAO BOCK TRANSACTION SYSTEMS, LLC, Plaintiff,
ONLINE RESOURCES CORP., Defendant.
THOMAS D. THALKEN, Magistrate Judge.
This matter is before the court on the Motion to Compel (Filing No. 88 in Case 8:13CV231 and Filing No. 104 in Case 8:13CV245) filed by ACI Worldwide, LLC (ACI) and Online Resources Corporation (ORCC). The movants filed a brief (Filing No. 89) and an index of evidence (Filing No. 90) in support of the motion. Joao Bock Transaction Systems, LLC (Joao Bock) filed a brief (Filing No. 92) and an index of evidence (Filing No. 93) in opposition to the motion. The movants filed a brief (Filing No. 96) in reply.
The record reflects these cases arise from a contractual relationship between the parties concerning intellectual property including United States Patent No. 7, 096, 003 (the 003 Patent). In November 2012, ACI and Joao Bock entered into a License, Settlement and Release Agreement concerning the 003 Patent. In March 2013, ACI acquired ORCC who continues to exist as a wholly owned ACI subsidiary. On June 18, 2013, Joao Bock filed suit against ORCC in the United States District Court for the Southern District of New York alleging infringement of the 003 Patent. On July 31, 2013, ACI and ORCC filed suit against Joao Bock in the United States District Court for the District of Nebraska alleging breach of the November 2012 Agreement and seeking declaratory judgment of non-infringement and invalidity of the 003 Patent. On August 9, 2013, the Southern District of New York court transferred that lawsuit to this district and the two cases were consolidated.
On November 27, 2013, the court entered an initial progression order setting a specific claim construction and discovery schedule leading to a Markman hearing scheduled for November 13, 2014. See Filing No. 20; see also Filing No. 35. The scheduling orders included deadlines for ORCC to file a statement of preliminary invalidity contentions. The original deadline was March 21, 2014, but was extended to May 29, 2014. See Filing No. 20; see also Filing No. 35. ORCC did not file a statement of preliminary invalidity contentions. ACI and ORCC have filed claim construction and other documents in compliance with the scheduling requirements.
The parties filed motions for partial summary judgment related to breach of the agreement on June 26, 2014. See Filing Nos. 38 and 42. Additionally, on July 3, 2014, Joao Bock filed a Motion for Terminating Sanctions. See Filing No. 62. In the motion, Joao Bock seeks dismissal of ACI and ORCC's "causes of action" and "their affirmative defenses of invalidity and counterclaim of invalidity" based on alleged litigation misconduct and failing to timely file invalidity contentions. Id.
The instant discovery dispute originated from ACI and ORCC's May 23, 2014, discovery requests and Joao Bock's corresponding June 25, 2014, responses and August 14, 2014, supplemental responses. See Filing No. 56 - Certificate of Service; Filing No. 85. In short, ACI and ORCC seek discovery related to the issue of the 003 Patent's alleged invalidity, which Joao Bock argues is irrelevant to the claims and defenses remaining in this lawsuit. See Filing No. 88 - Motion p. 1; Filing No. 92 - Response p. 7-10. The parties conferred about the discovery dispute but were unable to resolve the matter without court involvement.
On September 10, 2014, ACI and ORCC filed the instant motion to compel. See Filing No. 88. Specifically, ACI and ORCC seek "documents related to... allegations by similarly situated parties that the 003 Patent is invalid." See Filing No. 89 - Brief p.
2. For example, Request for Production No. 1 seeks, "all invalidity contentions asserted against [the 003 Patent]." Id. at 5. Correspondingly, ACI and ORCC request all evidence, reports, orders, expert disclosures, and deposition transcripts regarding or discussing assertions of invalidity. See id. at 6-8 (Requests for Production Nos. 2, 3, 7, 10, and 11). ACI and ORCC also seek an award of costs and fees associated with bringing the motion to compel. See Filing No. 88 - Motion p. 2.
Joao Bock initially objected to the discovery requests on the bases of attorneyclient privilege, attorney work-product doctrine, relevance, vagueness, over breadth, and undue burden. Joao Bock's responses also state:
Subject to the general and specific objections listed above, and to the extent they have not already been produced, JBTS will produce all documents in its possession, custody or control that are responsive to this Request to the extent such relevant, non-privileged documents exist. Such documents will not be produced, however, until and unless the Court determines whether causes of action, affirmative defenses, and/or counterclaims based upon invalidity of the Patent-in-Suit have not been waived.
See Filing No. 89 - Brief p. 2-8 (responses for Requests for Production Nos. 1, 2, 3, and 11). Joao Bock originally stated no responsive documents existed for Request for Production No. 10, but later amended the response to include reference to a Middle District of Florida case and to include the above-quoted language. Id. at 8 (quoting response and supplemental response for Request for Production No. 10). Likewise, for Request for Production No. 7, Joao Bock originally stated no responsive documents existed, but later amended the response to include reference to an order issued in a District of Delaware case and to include the above-quoted language. Id. at 7 (quoting response and supplemental response for Request for Production No. 7). Nevertheless, Joao Bock produced the District of Delaware case order. See Filing No. 92 - Response p. 9.
ACI and ORCC argue Joao Bock fails to substantiate any privilege or burden objections preventing disclosure of documents because Joao Bock failed to provide a privilege log as required by Fed.R.Civ.P. 26(b)(5)(A) and this court's initial progression order. See Filing No. 89 - Brief p. 9-11; Filing No. 96 - Reply p. 4, 7-9; see also Filing No. 20 - Order. Joao Bock admits the privilege and undue burden objections were lodged to preserve them, however Joao Bock refused production primarily on relevance grounds. See Filing No. 92 - Response p. 12-13 (noting it would be a burden to produce irrelevant documents). Joao Bock's unsubstantiated objections are overruled considering the court's resolution of the relevance issues.
Although ACI and ORCC allege invalidity of the 003 Patent in their complaint, Joao Bock argues they waived the issue by failing to timely file invalidity contentions in accordance with the court's progression orders. See Filing No. 92 - Response p. 7-8. The waiver renders documents related to invalidity irrelevant, including those documents sought in Request for Production Nos. 1, 2, 3, 7, 10, and 11. Id. Joao Bock recognizes the court has not yet resolved the waiver issue by way of the Motion for Terminating Sanctions. Id. at 8. Joao Bock contends, however, it is still reasonable to withhold the documents under these circumstances at least until the court ...