On May 25, 2011, ALJ Robert K. Rogers, Jr. issued public versions of several orders granting Respondent Samsung Electronics Co., Ltd.’s (“Samsung”) motion to compel Complainant Spansion LLC’s (“Spansion”) to produce corporate testimony regarding its products; granting-in-part Respondents’ motion to strike portions of a Spansion initial expert report; granting-in-part Spansion’s motion to supplement an expert report; and denying Spansion’s motion for summary determination that it satisfies the economic prong of the domestic industry requirement in Certain Flash Memory Chips and Products Containing Same (Inv. No. 337-TA-735).

By way of background, Spansion’s complaint filed in August 2010 asserted that certain Samsung products infringe U.S. Patent Nos. 6,369,416 (the ‘416 Patent), 6,459,625 (the ‘625 Patent), 6,900,124 (the ‘124 Patent), and 7,018,922 (the ‘922 Patent) (collectively, the Asserted Patents).  The complaint named as Respondents not only various Samsung entities who manufacture or distribute flash memory chips, but also downstream manufacturers and sellers of products incorporating such flash memory chips.  See our August 11, 2010 post for more information.

In Order No. 29 (dated April 28, 2011), ALJ Rogers granted Samsung’s motion to compel a Spansion corporate witness to provide deposition testimony regarding certain Spansion products.   According to the order, during a corporate deposition of its witness, Spansion indicated it was withdrawing contentions from the domestic industry section of its complaint that certain Spansion products practiced the Asserted Patents.  In response to Samsung’s questions as to whether those withdrawn Spansion products exhibit a feature within the Asserted Patents, i.e., if they exhibit metal layer lines oriented substantially in one direction, the witness refused to answer on the grounds of attorney-client privilege and work-product doctrine.  Samsung alleged that Spansion changed its domestic industry claims because Spansion’s own products are invalidating prior art as to the Asserted Patents.  Samsung argued that its factual inquiries do not call for privileged information and at any rate, Spansion waived any privilege by permitting its witness to provide the same information regarding Spansion products that it continues to rely upon to support the domestic industry requirement.  Spansion generally argued that Samsung improperly sought legal analyses, strategies and mental processes protected by work-product and attorney-client privilege.

ALJ Rogers determined that Spansion did not meet its burden to show any attorney-client privilege, and that Samsung’s questions “about the physical characteristics of Spansion’s products do not require the disclosure of privileged information.”  ALJ Rogers further determined that although Spansion’s witness could have refused to answer questions as to whether a particular product’s feature is infringing if his only knowledge thereof came from an attorney, the witness waived any such privilege by testifying on this subject as to those Spansion products that allegedly continue to support the domestic industry requirement.   ALJ Rogers also determined that to decide otherwise would unduly prejudice Samsung, since Spansion’s conclusions on all its products are relevant to Samsung’s prior art invalidity defenses, and the record would be “imbalanced, containing only Spansion’s self-serving disclosures.”  Finally, ALJ Rogers determined that the work product doctrine does not protect Spansion’s witness from providing testimony regarding tests performed on Spansion products, even if they were at the direction of an attorney, because otherwise it would “allow an attorney to silence a witness merely by asking the witness to conduct an analysis.”  Accordingly, ALJ Rogers ordered Spansion’s corporate witness to provide testimony regarding the facts surrounding the examination, testing and analyses performed on all products asserted by Spansion (at any time in the investigation) to practice the asserted patents, including (1) the identities of the individuals performing the examination, testing and related analyses; (2) the identities of the specific products examined or tested, (3) the steps taken in performing the examination, testing and related analyses; (4) the physical characteristics of the products, (5) the results of examination, testing and related analyses; and (6) any comparisons made between the products examined or tested and the claims of any patent asserted in this investigation.

In Order No. 30 (dated May 3, 2011), ALJ Rogers granted-in-part and denied-in-part a motion by Samsung and other Respondents (collectively “Respondents”) to strike portions of Spansion’s expert report of Dr. Souri, provided on February 22, 2011.  According to the Order, Dr Souri’s report stated that he performed calculations to determine the relative orientations of metal lines in the metal layers of accused and domestic industry products, and that he relied on these calculations to determine whether these products meet the claim limitations of the ‘625 patent.  Two days after Dr. Souri’s expert report, Spansion produced computer code during the deposition of its corporate witness, who represented that Spansion used this code to test Spansion’s products.  Respondents’ expert relied upon this data to rebut Dr. Souri’s opinions.  However, Spansion did not produce the computer code relied upon by Dr. Souri until April 6, 2011, five days before Dr. Souri's deposition, at which it was confirmed that the code relied upon by Dr. Souri was written in late 2010 or early 2011 under his direction.  Respondents argued that Spansion’s late production of the code should preclude Spansion from relying on any testimony about the computer code produced on April 6, and any analysis or conclusions based on such code.

Spansion opposed the motion, arguing that this computer code was a “basic software tool” or “automated ruler,” and that such a disclosure of “a simple 3-page program” was comparable to informing Respondents that Dr. Souri used Microsoft Word or Excel, and therefore Spansion was under no obligation to produce it.  Spansion further argued that it produced the code only after it reviewed Respondents’ expert’s rebuttal report and learned that Respondents’ expert erroneously relied upon unrelated Spansion computer script to rebut Dr. Souri’s opinion.  Spansion also argued that it never asserted that Dr. Souri relied upon the computer code produced prior to April 6 to support his conclusions, and that Respondents suffered no prejudice because they deposed Dr. Souri on the “correct” code, and are responsible for their own erroneous assumption that the code produced prior to April 6 supported Dr. Souri’s calculations.  The Commission Investigative Staff (“OUII”) supported the motion in part, because Dr. Souri’s initial expert report did not comply with Ground Rule 6, but rather than striking all of Dr. Souri’s opinions based on the code, which would result in an unwarranted benefit to the Respondents, OUII suggested Respondents redepose Dr. Souri and serve a supplemental expert report.

ALJ Rogers determined that Ground Rule 6 expressly requires that an expert report contain “a complete statement of all opinions to be expressed and the basis and reasons therefore.”  ALJ Rogers further determined that without the custom-written computer code at issue, “we are left only with Dr. Souri’s wholly conclusory opinion in his expert report that a specific percentage of metal lines are oriented in the same direction.”  ALJ Rogers specifically determined that the complexity of the computer code is irrelevant, and that the code should have been produced with Dr. Souri’s initial report because it constituted “the basis” for his opinion that the “oriented substantially in one direction” limitation was met.   ALJ Rogers also determined that the April 6th production of the code was not a proper supplementation of the initial report, because the code was not acquired after the initial report.  As to a remedy, ALJ Rogers determined that Dr. Souri would be able to testify regarding the conclusions in his report, but he is prohibited to testify on the computer code, or methods and calculations used to arrive at those percentages that are not specifically in his initial report, and his testimony will be accorded whatever weight is appropriate given the amount of support permitted by this order.  ALJ Rogers agreed with OUII that Respondents’ suggested remedy would be too severe, but given that fact and expert discovery are concluded and the parties are preparing for trial, it would be unduly prejudicial for Respondents to conduct an additional deposition and submit an additional expert report due to Spansion’s failure to provide timely discovery.

In Order No. 32 (dated May 9, 2011) ALJ Rogers granted-in-part and denied-in-part a motion by Spansion to submit a supplemental expert report dated April 12, 2011, on matters related to remedy and bonding.  According to the Order, Spansion argued that it timely served an initial expert report on remedy and bonding by the February 22, 2011 deadline, and that additional discovery after this deadline required the supplementation.  Spansion further intimated that given the seventeen respondents and the pace of discovery, it would be unreasonable to require a separate supplementation each time a new piece of discovery became available, and rather than supplement its expert report in piecemeal fashion, Spansion waited to submit a single supplementation on April 12.  Spansion further argued that it would have been improper to address any supplementation for the first time in its expert’s March 28, 2011 rebuttal report, and Respondents suffered no prejudice because they received the April 12 supplemental report prior to the expert’s deposition, and they questioned the expert on the supplemental report at the deposition.  Respondents opposed Spansion’s motion on the grounds that Spansion lacked good cause to supplement the report, and the majority of new discovery was produced prior to the initial and rebuttal deadlines of February 22 and March 28, respectively.  Respondents also claim prejudice, given the production of the supplemental report at the end of the day on April 12, which was immediately before the expert’s scheduled deposition of April 14, which in turn could not be postponed due to the close of expert discovery on April 15, 2011.  Respondents further argue that Spansion did not seasonably supplement its expert report, and Spansion delayed serving the supplementation which purportedly was ready by April 7, 2011.  OUII did not oppose any portion of the supplemental report based on information first obtained after the initial and rebuttal expert report deadlines.

ALJ Rogers first determined that based on Commission Rule 210.27(c), any supplementation offered by Spansion must be based solely on information that was not available to its expert prior to the February 22, 2011 initial expert report deadline.  ALJ Rogers agreed with Spansion and determined it would be inappropriate for an expert to include in a rebuttal expert report new opinions based on newly-discovered information.  More specifically, ALJ Rogers determined that the purpose of a rebuttal report is to rebut opinions in an opposing expert’s initial report, and not to “serve as a second opportunity for an expert to offer new opinions in support of the issues addressed in the initial expert report.”   ALJ further determined that in general, he disagreed with Spansion’s decision to wait to serve a single supplement after receiving all new information, rather than serve multiple supplements as new information is received, because waiting a “prolonged period of time before serving a supplemental expert report does not meet” Commission Rule 210.27(c) to “seasonably” amend prior responses to include new information.

Addressing Spansion’s supplemental report in more detail, ALJ Rogers determined that a large section of the report was irrelevant, because it addressed the so-called EPROMs factors to determine whether it is appropriate to issue a limited exclusion order (LEO) that includes downstream products from parties not named as respondents in the investigation.  ALJ Rogers determined that a Federal Circuit decision (Kyocera Wireless Corp. v ITC, 545 F.3d 1340 (Fed. Cir. 2008) obviated these EPROMs factors by holding that limited exclusion orders only apply to named respondents that the ITC finds in violation of Section 337.  Since the Respondents that allegedly incorporate Samsung flash memory chips into their devices are already part of this Investigation, ALJ Rogers declined to allow Spansion to supplement the expert report to include additional opinions concerning these EPROMs factors.

With respect to new opinions in the supplemental report concerning Spansion’s request for a cease and desist order, ALJ Rogers closely inspected the dates that the documents and deposition testimony on which such allegedly new opinions relied became available.  ALJ permitted supplementation of those opinions that relied upon documents produced prior to February 22, 2011, but which were not identified as relevant until (i) Respondents’ supplemental discovery responses dated April 6, and (ii) deposition testimony that provided necessary context for such documents became available on March 24, 2011.  ALJ Rogers similarly determined that supplementation was proper with respect to documents produced prior to February 22 that required deposition transcripts for necessary context, which in turn were not available until March 4 or March 10.  Notably, ALJ Rogers held that when determining whether deposition testimony provides a basis for supplementation, one considers the date of the final transcript, and not the date of any rough or draft transcript.   However, ALJ Rogers denied supplementation when the purportedly new opinion was based on documents provided as part of a voluminous document production just prior to February 22, and Spansion waited nearly two months to provide the supplemental report.  ALJ Rogers similarly denied the supplementation of bonding information based on documents produced on February 22, the date the initial expert report was due, because delaying supplementing until April 12 failed to meet the requirement to “seasonably” supplement the report.

Finally, ALJ Rogers addressed an argument by Spansion that Respondents’ opposition brief should be stricken for violating Commission Rule 210.4(b), which requires every motion or other paper of a party represented by an attorney to be signed by at least one attorney of record, and the opposition brief was signed only by counsel for one of the Respondents, rather than counsel for all of the Respondents.  ALJ determined that Rule 210.4(b) is meant to prevent the submission of unsigned documents, which is not the case here, and counsel for one of the Respondents may submit the opposition brief on behalf of all Respondents.

In Order No. 33 (dated May 9, 2011), ALJ Rogers denied Spansion’s motion for summary determination that it satisfies the economic prong of the domestic industry requirement.  According to the Order, Spansion argued that it meets the economic prong through significant investment in plant and equipment and significant employment of labor or capital related to the manufacture of flash memory products at Spansion’s fabrication facilities located in Austin, Texas.  Spansion defined five separate “technology nodes,” or groups of products, that allegedly each practice some of the asserted patents.  Spansion then provided financial data relating to investment in plant and equipment, and labor or capital for each technology node, arguing that investment in each node is significant.  Respondents opposed the motion, arguing there is a genuine dispute of a material fact regarding the extent to which the multiple products within each technology node practice the Asserted Patents, and therefore the financial data correlating to each technology node is inaccurate.  OUII supported Spansion’s motion, asserting that Spansion’s investments with regard to their manufacturing facilities, and employment of labor are significant.

ALJ Rogers determined that there is a genuine dispute of material fact precluding summary determination.  He agreed with Respondents that Spansion’s analysis assumes that each of the products made using the same process technology in the same technology node practices the patents.  With respect to the ‘922 and ‘124 patents, which require certain contact sizes, Spansion’s expert tested a single chip in each technology node and “offered the unsupported opinion that it was representative of all chips in the technology node.”  However, Respondents provided evidence that the contact sizes for individual chips within two of the same technology nodes were different.  Similarly, Respondents provided evidence that the metal interconnect structure of individual flash memory chips can vary significantly, which may affect whether such products practice any claim of the ‘625 patent.  Respondents also argued that contacts within Spansion’s other products have non-linear or multiple slopes, which may prevent such products from practicing the ‘416 patent.   ALJ Rogers determined that although Respondents’ opposition focused on the technical prong, their arguments were relevant to the economic prong, because if Spansion is unable to demonstrate that every chip within its technology nodes practices the patents, “the scope of Spansion’s relevant investment cannot be accurately determined at this time,” and summary determination on the economic prong is improper.