NDCA issues order on early damages disclosure

On March 8, 2013, the NDCA issued an opinion in Eon Corp. IP Holding LLC v. Sensus USA Inc., No. C-12-01011 EMC (EDL) (Doc. No. 657), concerning defendants' request that plaintiff provide early disclosure of its damages contentions. One of the court's first comments is telling: "Because the question of early damages disclosure in patent cases is a recurring and important one, the Court issues this order to explain its reasoning and guidance to the parties." Slip op at 1.

Defendants asked for early disclosure of the legal and factual bases for lost profits and reasonable royalty damages, including factual support for the Panduit elements and the Georgia-Pacific factors. Defendants also proposed that any amendment of damages contentions later in the case be permitted only upon order of the court for good cause shown. Slip op. at 3. Defendants cited Brandywine Communications Techs., Inc. v. Cisco Systems, Inc., No. 12-1669, Docket No. 114 (N.D. Cal. Nov. 13, 2012), "in which Judge Alsup ordered the plaintiff to provide very thorough damages information as part of its Rule 26(a) initial disclosures. That order called for information on competing products and how sales had been affected by the alleged infringement, as well as information on the royalty rate and royalty base, including the basis for that computation, and information supporting each asserted Georgia Pacific factor and any relevant license agreements." Slip op. at 3.

Plaintiff resisted early disclosure, but asked, if the court were inclined to grant defendants' request, that defendants be compelled to produce sales information, analysis of the value of allegedly infringing systems, and patent licensing practices. Plaintiff also objected to the showing of good cause for any later changes to its damages contentions.

The court ordered plaintiff to provide some early discovery into its damages case, but did not require good cause for amendment of the damages disclosure. The court also required plaintiff to provide its damages theory as to each category of defendants plaintiff had sued cellular network providers, handset manufacturers, and other software and hardware providers. The court also required defendants to disclose generally their revenue as well as license information. Finally, the parties agreed that plaintiff would answer several questions posed by defendants (and treat them as standard discovery requests), but the parties and court agreed that the plaintiff would not be required to provide a specific computation of royalty rate.