April 29, 2013
CRADLE IP LLC, Plaintiff,
TEXAS INSTRUMENTS, INC., Defendant.
SUE L. ROBINSON, District Judge.
At Wilmington this 29th day of April 2013, having reviewed non-party Nokia Siemens Networks U.S. LLC's ("NSN US's") motion to quash (D.I. 146) and plaintiff Cradle IP LLC's ("Cradle's") cross-motion to compel (D.I. 163);
IT IS ORDERED that, for the following reasons, NSN US's motion is denied in part, and Cradle's motion is granted in part:
1. Background. Cradle filed the instant action against Texas Instruments, Inc. ("TI") on December 16, 2011, accusing a number of TI's microprocessor chips (the "accused devices") of infringing United States Patent Nos. 6, 647, 450; 6, 874, 049; and 6, 708, 259. (D.I. 1) NSN U.S. is not a party to the action, but Cradle has served a subpoena on it seeking documents and a deposition related to Nokia Siemens base transceiver stations that TI has identified as incorporating certain of the accused devices. (D.I. 147, ex. 3; D.I. 167, ex. 4 at 15) Specifically, Cradle seeks information by way of a deposition sufficient to identify: "any operation systems or base software" that supports Nokia-developed applications for the base transceiver stations; the "programming or use of hardware semaphores" in certain accused devices that are incorporated into the base transceiver stations; and the supply chain for the base transceiver stations. (D.I. 147, ex. 3) Cradle also requests documents that substantially mirror these topics. ( Id. )
2. Non-party NSN US, a Delaware corporation, has its principal place of business in Irving, Texas and maintains one of its offices in Bedminster, New Jersey. (D.I. 148 at ¶ 2; D.I. 167, ex. 13) It argues that the subpoena is improper for requesting documents and information that are not in its possession, custody, or control. Rather, it avers, information regarding the operation of the accused devices in Nokia Siemens base transceiver stations is in the possession, custody, or control of Nokia Siemens Networks Oy ("NSN Oy"), its sister Finnish company and another non-party to the litigation. ( See D.I. 148 at ¶¶ 6-7, 9) NSN U.S. further contends that the subpoena must be quashed because it violates the scope of the court's subpoena enforcement power. (D.I. 147 at 4-5)
3. Standard. Rule 45(a)(1)(A)(iii) provides that the test for production sought by a subpoena is whether the documents, information, or tangible things are in the "possession, custody, or control" of the person on whom the subpoena is served. The court can compel a corporate entity that is deemed to be in "control" of documents to produce those documents, even if they are also in the possession and control of a non-party. Novartis Pharm. Corp. v. Eon Labs Mfg., Inc., 206 F.R.D. 392, 395 (D. Del. 2002). "Control is defined as the legal right to obtain the documents required on demand." Power Integrations, Inc. v. Fairchild Semiconductor lnt'l, Inc., 233 F.R.D. 143, 145 (D. Del. 2005) (citing Gerling Int'l Ins. Co. v. Comm'r, 839 F.2d 131, 140 (3d Cir. 1988)). The court has declined to apply a broader definition of "control" that would also include an inquiry into the practical ability of the subpoenaed party to obtain documents. See id. at 146. Although control is often found when a parent corporation is requested to produce documents of a wholly-owned subsidiary, separate and distinct corporate identities are not readily disregarded, "except in rare circumstances justifying the application of the alter ego doctrine to pierce the corporate veil of the subsidiary." See id. (citing Gerling, 839 F.2d at 140) (declining to require a non-party subsidiary to obtain documents held by its foreign parent corporation); see also Novartis, 206 F.R.D. at 395 (finding no control when two corporate entities were not "so intertwined as to render meaningless their separate corporate identities"). The district court has discretion whether to quash or modify a subpoena. See Wedge wood Vill. Pharmacy, Inc. v. United States, 421 F.3d 263, 268 n.5 (3d Cir. 2005); Connaught Labs., Inc. v. SmithKline Beecham P.L.C., 7 F.Supp.2d 477, 480 (D. Del. 1998).
4. Discussion. The bulk of the instant dispute revolves around whether NSN U.S. has "control" over documents or information that is in the possession, custody, or control of NSN Oy. Power Integrations is instructive on this issue. In Power Integrations, the court quashed a subpoena that was served on LGE-USA, a non-party American company, after finding that LGE-USA had no control over documents it would be required to obtain from LGE-Korea, its foreign parent company. LGE-USA and LGE-Korea had "little more than a vendor relationship;" LGE-USA did not utilize the information requested in the subpoena in the normal course of its business; and another entity, LGE-Aiabama, was responsible for service and maintenance issues related to LGE-Korea's products. Power Integrations, 233 F.R.D. at 145-46. The court concluded that the corporate relationship between LGE-USA and LGE-Korea did not present the "rare circumstances" to justify disregarding the separate and distinct corporate identity of LGE-USA. Id. at 144-45.
5. Neither NSN U.S. nor NSN Oy is a party to the instant litigation. They are sister corporate entities, which does not automatically permit an inference that NSN U.S. controls the documents and information being sought by Cradle that are in NSN Oy's possession, custody, or control. NSN U.S. asserts that NSN Oy is the entity that "designs and maintains the applications driver software, responsible for interacting with the microprocessors for Nokia Siemens Network base transceiver stations...." (D.I. 148 at ¶ 6; D.I. 172 at ¶ 4) NSN U.S. itself only "operates to promote, distribute and maintain equipment produced by [NSN Oy] affiliates throughout the world." (D.I. 148 at ¶ 5) It does not manufacture any products in the United States; have any need to store or modify human readable source code; or make any changes to the applications driver software in the base transceiver stations that it obtains from NSN Oy. Id. at ¶ 8; D.I. 172 at ¶¶ 4-7)
6. Cradle does not dispute NSN US's contentions in this regard. Rather, it responds with allegations of NSN Oy's involvement in the development of the accused devices. These allegations, however, do not relate to NSN US's legal right to obtain documents or information in the possession, custody, or control of NSN Oy; they do not even identify NSN US. Instead, they are consistent with NSN US's submission that NSN Oy is the entity from which Cradle should seek certain technical information.
7. The relationship between NSN U.S. and NSN Oy is factually similar to that between LGE-USA and LGE-Korea in Power Integrations because NSN U.S. purchases the Nokia Siemens base station transceivers that are developed by NSN Oy, a separate and distinct corporate entity. NSN U.S. concedes that it also "maintains" products that it obtains from NSN Oy, but that is not sufficient justification for the court to disregard the separate and distinct corporate identity of NSN US. Although I recognize the difficulty Cradle faces in pursuing discovery of NSN Oy's source code due to Finnish law, I conclude that NSN U.S. has no control over documents or information that it would have to obtain from NSN Oy.
8. Nevertheless, I am concerned with certain aspects of NSN US's motion to quash. In the first instance, Cradle's subpoena is not limited to the production of human readable source code or applications driver software; it also seeks information regarding the identify, operation, and use of certain hardware semaphores and software, as well as information about the supply chain of the Nokia Siemens base transceiver stations. Given this understanding, it is unclear from the record on motion practice whether NSN U.S. is in the possession, custody, or control of such documents or information - besides documents or information it would need to obtain from NSN Oy -that may be responsive to the subpoena. My concern is heightened by NSN US's self-characterized role in "maintaining" Nokia Siemens base transceiver stations and also by a non-disclosure agreement in which NSN U.S. apparently agreed to share with other parties "know-how, techniques, designs, specifications, drawings, blueprints, tracings, diagrams, models, samples, flow charts, data, [or] computer programs" related to Nokia Siemens network equipment for purposes of testing a mobile device. (D.I. 178, ex. 1 at TI-CRA0-0870552)
9. I recognize that it is unclear whether any NSN U.S. employee or representative within the court's territorial limits may have knowledge that is responsive to the subpoena. The scope of a court's subpoena enforcement powers is limited by Rule 45(c)(3)(A)(ii), which provides that a subpoena requiring "a person who is neither a party nor a party's officer to travel more than 100 miles from where that person resides, is employed, or regularly transacts business in person" must be quashed or modified. NSN U.S. avers that no potential witnesses with knowledge of the information sought by Cradle reside or work in Delaware and that no NSN U.S. employee has possession, custody, or control of applications driver software. (D.I. 148 at ¶¶ 4, 7) These averments leave open the possibility that there are NSN U.S. employees or representatives outside of Delaware, but still within the territorial limits of Rule 45(b)(2), who may have information that is responsive to the subpoena. For instance, NSN U.S. does not dispute that its New Jersey office is within 100 miles of this court (D.I. 164 at 8); NSN U.S. only asserts that the office is a sales and support location, not a design location. (D.I. 171 at 11) Even if NSN US's employees in New Jersey do not design the Nokia Siemens base transceiver stations or possess applications driver software, NSN U.S. has not foreclosed the possibility that they may have other information or documents that are responsive to Cradle's subpoena.
10. Conclusion. For the foregoing reasons, I grant Cradle's motion to compel as follows: To the extent NSN U.S. has an employee or representative who has knowledge of the topics identified in the subpoena; does not need to obtain documents or information from NSN Oy for such knowledge; and lives, works, or regularly transacts business within 100 miles of the designated place of deposition, NSN U.S. shall produce such employee or representative, prepared to testify regarding the information sought in the subpoena. As the production subpoena is attached to the subpoena for a deposition, the deposition witness is also directed to bring responsive documents that NSN U.S. does not need to obtain from NSN Oy, even if such documents are not located within 100 miles of the place of deposition or production. See Hay Group, Inc. v. E.B.S. Acquisition Corp., 360 F.3d 404, 412 (3d Cir. 2004) ("Nothing in th[e] language [of Rule 45(a)(2)] suggests that a witness who is subpoenaed to testify may not also be directed to bring documents that are not located within the territorial limits set out in Rule 45(b)(2).").