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Liqwd, Inc. v. L'Oreal USA, Inc.

United States District Court, D. Delaware

February 27, 2019

LIQWD, INC. and OLAPLEX LLC, Plaintiffs,
v.
L'OREAL USA, INC., L'OREAL USA PRODUCTS, INC., L'OREAL USA S/D, INC., and REDKEN 5th AVENUE NYC, LLC, Defendants.

          MEMORANDUM ORDER

          Sherry R. Fallon, United States Magistrate Judge.

         At Wilmington this 27th day of February, 2019, the court having considered: (1) the motion to compel Gelest, Inc., Jonathan Goff, and Ed Kimble to comply with subpoenas, filed by defendants L'Oreal USA, Inc., L'Oreal USA Products, Inc., L'Oreal USA S/D, Inc., and Redken 5th Avenue NYC, L.L.C. (collectively, "L'Oreal") (D.I. 2); and (2) L'Oreal's motion to compel Alan Gold to comply with a deposition subpoena (D.I. 3); and having considered the arguments presented during the February 25, 2019 hearing on the pending motions; IT IS HEREBY ORDERED THAT the motion to compel Gelest, Inc. ("Gelest"), Jonathan Goff, and Ed Kimble to comply with subpoenas is GRANTED-IN-PART, and the motion to compel Alan Gold to comply with the deposition subpoena is GRANTED-IN-PART, for the reasons set forth below.

         1. Background.

         On January 5, 2017, plaintiffs Liqwd, Inc. and Olaplex LLC (together, "Olaplex") brought a civil action in the District of Delaware for patent infringement (the "Underlying Action"). (C.A. No. 17-14-JFB-SRF, D.I. 2) In the Underlying Action, Olaplex alleges causes of action for infringement of United States Patent Nos. 9, 498, 419 ("the '419 patent") and 9, 668, 954 ("the '954 patent") (together, the "patents-in-suit"). (C.A. No. 17- 14, D.I. 636 at ¶¶ 90-138) The patents-in-suit are directed to formulations, kits, and methods of applying a bleaching mixture containing an active agent of maleic acid to the hair during treatments to rebuild disulfide bonds. (Id., Ex. A at Abstract; Ex. B at Abstract)

         2. Olaplex represents that its products are "created, mixed, manufactured and/or bottled" by Gelest. (D.I. 2, Ex. B at 10, 12) On October 23, 2018, L'Oreal served Gelest with a subpoena to produce documents reflecting the product formulas used by Gelest for the Olaplex products, seeking compliance by November 5, 2018. (Id., Ex. E) Specifically, the subpoena requested the production of: (1) "All Communications with Plaintiffs or any other Person Concerning the Olaplex Products;" (2) "All Documents, Communications, and Things reflecting the ingredients of Olaplex Products;" (3) "All invoices You have issued to Plaintiffs Concerning the Olaplex Products;" and (4) "All product formulas You have created, received or used Concerning the Olaplex products." (Id.)

         3. On November 1, 2018, counsel to Gelest objected to the subpoena on the grounds that it sought confidential trade secret information. (Id., Ex. F) On November 7, 2018, L'Oreal met and conferred with Gelest and agreed to extend the protective order governing the Underlying Action to the proprietary information produced in response to the document subpoena. (Id. at ¶ 8; Ex. G) Gelest produced some documents responsive to the subpoena on November 12, 2018 and November 29, 2018, including invoices and communications between Gelest and Olaplex. (Id. at ¶ 9) However, the production did not include documents showing Gelest's manufacturing process, or the formulas or compositions used to make Olaplex's products. (Id.)

         4. In its answer and counterclaims in the Underlying Action, L'Oreal asserted a defense of invalidity based on prior use pursuant to 35 U.S.C. § 102. (C.A. No. 17-14-JFB-SRF, D.I. 650 at ¶¶ 255-59, 265-69) L'Oreal began serving subpoenas on certain stylists believed to have been early users of Olaplex's products, including Alan Gold, who was served with a subpoena on November 27, 2018. (D.I. 3, Ex. B) In correspondence dated December 11, 2018, counsel for the stylists refused to provide deposition dates in light of the stylists' objections to the subpoenas. (Id., Exs. D & E)

         5. On December 7, 2018, L'Oreal served subpoenas to testify at a deposition on Gelest, Jonathan Goff, and Ed Kimble, seeking testimony on the formulas and compositions used by Gelest to make the Olaplex products, and Gelest's communications with third parties regarding the same. (D.I. 2, Exs. H-J)

         6. The depositions for Mr. Gold, Mr. Goff, Mr. Kimble, and Gelest were scheduled for December 18, 2018. (D.I. 3, Ex. B; D.I. 2, Exs. H-J) On December 11, 2018, Mr. Gold, Gelest, Mr. Goff, and Mr. Kimble objected to the deposition subpoena on the basis that it sought confidential, proprietary trade secret information. (D.I. 3, Ex. E; D.I. 2, Ex. K) During a December 12, 2018 hearing, the court indicated that it would enter an order compelling subpoenaed third parties to appear for depositions, if necessary.[1] (12/12/18 Tr. at 141:16-142:7) Fact discovery closed on December 21, 2018. (C.A. No. 17-14-JFB-SRF, D.I. 192 at ¶ 3)

         7. On December 26, 2018, L'Oreal met and conferred with Gelest to address Gelest's concerns about producing confidential trade secret information. (D.I. 2 at ¶ 15) Gelest indicated it would not supply the requested information without Olaplex's consent, and Olaplex responded on January 7, 2019 that it would not withhold consent on confidentiality grounds. (Id. at ¶ 16; Ex. O) L'Oreal narrowed the document requests and deposition topics to Gelest, but Gelest's counsel responded on January 15, 2019 that it needed to confirm with Olaplex's counsel regarding consent, and there was no availability for depositions over the next two weeks. (Id., Ex. O) Gelest never responded to L'Oreal's request for available dates. (Id. at ¶ 16)

         8. On January 4, 2019, L'Oreal moved the court to modify the case schedule in the Underlying Action to extend the deadline to complete third-party discovery. (C.A. No. 17-14-JFB-SRF, D.I. 596) On January 14, 2019, the court modified the case schedule in the Underlying Action to allow L'Oreal to take discovery from various third parties on or before January 25, 2019. (C.A. No. 17-14-JFB-SRF, D.I. 610) On January 19, 2019, Mr. Gold confirmed his intention to stand by his objections to the subpoena. (D.I. 3 at ¶¶ 17-18; Ex. N)

         9. On January 30, 2019, counsel for Gelest conferred with counsel for L'Oreal in an effort to resolve the motion to compel. (D.I. 28 at ¶ 3) Gelest agreed to produce three sample batch records from 2016 to 2018, and one sample batch record from October 2014. (Id.)

         10. Trial in the Underlying Action is set for July 29, 2019. (C.A. No. 17-14-JFB-SRF, D.I. 394)

         11. ...


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