Tessera, Inc. v. Micron Tech., Inc., 2006 WL 733498 (N.D. Cal. Mar. 22, 2006)
The plaintiff in this case licenses its semiconductor packaging technology directly to semiconductor manufacturers; typically, licensing agreements require the semiconductor manufacturers to pay plaintiff royalties on the volume of synchcronous RDRAM chips sold which uses its semiconductor packaging technology. Plaintiff’s complaint alleged patent infringement, antitrust violations and various state law claims against various semiconductor manufacturers. Plaintiff alleged that defendants unlawfully colluded with others to boycott the synchronous RDRAM chip to reduce demand for them and artificially inflate the price of pre-existing and inferior DRAM chips for their own financial gain. Plaintiff alleged that defendants’ actions deprived the company of significant royalties.
Before plaintiff filed suit, the Federal Trade Commission had undertaken an investigation and found that certain semiconductor manufacturers, including Hynix Semiconductor Industries, Inc. (“Hynix, Inc.”), had colluded to boycott and impact the market price of DRAM chips. The U.S. Department of Justice also had undertaken such an investigation. In May 2005, Hynix, Inc. pleaded guilty to an information charging a violation of the Sherman Antitrust Act and was fined $185 million.
Hynix, Inc. is a Korean company and parent to U.S. subsidiary, Hynix Semiconductor America. Because Hynix, Inc. participated in the price fixing conspiracy with various semiconductor manufacturers, plaintiff alleged that Hynix Semiconductor America had documents especially relevant to the underlying litigation. Plaintiff sought documents from Hynix, Inc. and Hynix Semiconductor America and “each of their successors, predecessors and related entities, including subsidiaries, parent corporations, divisions, officers, directors, employees, agents, representatives, attorneys and anyone acting on their behalf.” Specifically, plaintiff sought: (1) documents already produced in other cases involving the same issues in Tessera’s case against Micron Technology, Inc. and the Infineon companies; (2) documents relating to Tessera and its technology; and (3) communications relating to packaging technology used in DRAM products.
Plaintiff moved to compel production of documents from non-party Hynix Semiconductor America on the grounds that the documents requested were relevant, that the documents sought from Hynix, Inc. were within the control of its U.S. subsidiary Hynix Semiconductor America and that the documents sought were within three narrowly tailored categories.
The court granted the motion in part and denied it in part.
First, the court concluded that plaintiff had failed to establish that the non-party U.S. subsidiary had control over its foreign parent’s documents:
Aside from documents from the Korean parent company which are already in possession of the U.S. subsidiary as a result of preceding governmental investigations, antitrust and patent litigation, plaintiff Tessera has not shown that Hynix Semiconductor America has the legal right to obtain other documents from Hynix, Inc. upon demand. Although the Korean parent company owns 96.7 percent of the U.S. subsidiary, the Hynix Semiconductor companies form a global sales, marketing and distribution network, the Hynix Semiconductor companies have undertaken joint efforts in research and development of advanced packaging technology, the Hynix Semiconductor companies have overlapping directors and share counsel, there is no specific showing that Hynix Semiconductor America has the legal right to obtain any of the documents set forth in the document requests upon demand.
Thus, the court ruled that the duty of non-party Hynix Semiconductor America to produce documents from its Korean parent company was limited to existing electronic databases containing documents already in its possession (or that of their counsel).
The court next evaluated the requests for production, and granted plaintiff’s motion as to request no. 1. The court ordered Hynix Semiconductor America to produce on DVD-ROMS or hard drives documents derived using specific search terms from databases created for the U.S. Department of Justice investigation of the DRAM industry and any related preceding litigation in which the Hynix Semiconductor companies were a party. The court described the parties’ attempts to agree upon search terms, and ultimately set out the particular search terms to be used. The court further directed:
Because Hynix Semiconductor America has stated that the electronic document database for the FTC investigation of the DRAM industry cannot be electronically searched (beyond the “re” line), Hynix Semiconductor America shall produce the entire electronic document database from that investigation on hard drive or DVD-ROM subject to the following conditions. Hynix Semiconductor America shall notify relevant third parties that documents subject to protective order have been or will be produced to plaintiff Tessera. In an effort however to avoid any undue burden on non-party Hynix Semiconductor America, plaintiff Tessera shall assume responsibility to review the documents produced on DVD-ROMS and/or hard drives for responsiveness and obtain permission from any third parties for permission to use such documents. The DVD-ROMS and/or hard drives and all documents contained therein (regardless of their responsiveness to document request no. 1) shall be designated “Confidential-Outside Attorney Eyes Only” pursuant to the stipulated protective order negotiated between the parties in this motion and in the underlying litigation. Plaintiff Tessera shall assume the burden to challenge the designation of any documents produced by Hynix Semiconductor America. As discussed above, production of documents from the Korean parent company is limited to documents which preexisted on electronic databases from preceding litigation.
The court further granted plaintiff’s motion to compel as to request no. 2, as clarified by plaintiff, but denied the motion as to request no. 3. Plaintiff had placed no time or other limitations on the breadth of the request, and Hynix Semiconductor America asserted that the request involved potentially millions of pages of documents. The court concluded that the request constituted an undue burden on non-party Hynix Semiconductor America, and that, in any event, the documents produced in document request no. 2 would likely be responsive to request no. 3.