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In re Rearden LLC

United States Court of Appeals, Federal Circuit

November 17, 2016

In re: REARDEN LLC, REARDEN MOVA LLC, MO2, LLC, MOVA, LLC, Petitioners

         On Petition for Writ of Mandamus to the United States District Court for the Northern District of California in No. 3:15-cv-00797-JST, Judge Jon S. Tigar.

         ON PETITION

          Before Moore, Hughes, andSTOLL, Circuit Judges.

          ORDER

          STOLL, CIRCUIT JUDGE.

         The defendants in the underlying case, Rearden LLC, Rearden MOVA LLC, M02, LLC, and MOVA, LLC, petition for a writ of mandamus to challenge the district court's order compelling them to produce allegedly privileged documents. We conclude we have jurisdiction to decide their petition. We further conclude that petitioners' arguments fail to carry the high burden required on mandamus to overturn the district court's discovery determination. We therefore deny their petition.

         Background

         A.

         The central, underlying dispute in this case is one of ownership. Both sides claim ownership of visual effects technology known as "MOVA Contour Reality Capture" or "MOVA." MOVA technology can capture an actor's facial performance for use in motion picture special effects and video games. The technology is secured by trademarks, copyrights, trade secrets, and patents, including U.S. Patent Nos. 7, 548, 272 (the '272 patent), 7, 567, 293 (the '293 patent), 7, 605, 861 (the '861 patent), and 8, 659, 668 (the '668 patent), and the technology is reflected in hardware, source code, and other physical assets, all of which we will refer to collectively as the "MOVA assets." Both sides assert ownership of the MOVA assets. Because the facts are so fiercely contested, we first set forth the basic versions of events of the parties.

         According to respondent Virtue Global Holding Limited's ("VGHL") version of events, Steve Perlman, the head of Rearden LLC and the other petitioners, declined an offer from OL2, Inc. to acquire the MOVA assets and proposed OL2 sell the assets instead to then-Rearden employee, Greg LaSalle. Perlman promised to provide legal resources to get the business off the ground and introduced LaSalle to Rearden's corporate attorney who helped LaSalle establish his own company, M02, LLC, [1]and negotiate the asset transfer with OL2.

         In February 2013, respondent says Perlman demanded that LaSalle turn over the MOVA assets to Rearden. LaSalle's refusal to turn over the assets resulted in his termination of employment with Rearden. M02, acting through LaSalle, then sold the MOVA assets to Shenzhenshi Haitiecheng Science and Technology Co., Ltd. ("SHST") on May 8, 2013. SHST hired LaSalle, and through SHST's subsidiary, Digital Domain 3.0 ("DD3"), began to sell the technology to movie and videogame studios. LaSalle then filed paperwork to dissolve M02. VGHL subsequently obtained the MOVA assets from SHST.

         Petitioners agree that the MOVA assets were transferred to M02 but assert that SHST never obtained ownership. They contend that Perlman and Rearden, not LaSalle, formed original M02 to acquire the MOVA assets and hired LaSalle to file the corporate paperwork, acquire the MOVA assets, and manage, all on Rearden's behalf. They contend that, pursuant to his employment agreements, LaSalle assigned any rights in the MOVA assets to Rearden. They say that LaSalle was terminated before May 8, 2013, and lacked authority to act on M02's behalf. And, in any event, they assert, original M02 transferred the MOVA assets to Rearden MOVA LLC before the purported agreement between LaSalle and SHST.

         B.

         This case began in February 2015. SHST filed a complaint in the United States District Court for the Northern District of California, alleging that petitioners had made "false or misleading representations of fact concerning the ownership of the MOVA Assets in a campaign to mislead the public and actual and prospective users and licensees of those assets, " including forming a second "M02 LLC" named entity, falsely recording assignments of the MOVA patents from original M02 to Rearden MOVA LLC, and making statements that they owned the assets. SHST sought a declaration that it owned the MOVA assets and that petitioners' patent assignments were invalid. SHST also sought damages for alleged violations of California's false advertising and unfair competition statutes.

         Petitioners answered that the claims were waived because SHST "knew that authority from at least one of the Defendants was required for the proper transfer of the MOVA Assets." Petitioners also counterclaimed, seeking a declaration that they owned the MOVA assets, and seeking damages against SHST for, among other things, infringement of the '272, '293, '861, and '668 patents. SHST soon thereafter purportedly sold the assets to respondent VGHL. With SHST stipulating that it would remain in the case as a counterclaim defendant, the district court granted a motion to substitute in March 2016, and VGHL filed an amended complaint raising the same charges as raised in SHST's complaint. ...


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