SDCA Allows Discovery of License Agreements That Involve Many Patents Not Asserted in the Litigation

On December 10, 2010, Magistrate Judge (now District Judge) Battaglia of the Southern District of California issued an order compelling defendant Nokia to produce all licensing agreements covering wireless products that comply with 3G standards known as CDMA and WCDMA. SPH America, LLC v. Acer, Inc., Civil No. 09cv2535 JAH (AJB) (S.D. Cal., Dec. 10, 2010). In particular, SPH sought Nokia's license agreements where it licensed its CDMA or WCDMA technology to others and all of its cross-licensing agreements concerning CDMA or WCDMA technology. Apparently, the technology at issue was WCDMA. SPH argued that these broad Nokia agreements contained at least two patents that implemented the WCDMA standards. SPH contended that the license agreements were relevant because they

demonstrate rates paid by licensees for the use of patents comparable to SPH's patents-in-suit (Georgia-Pacific factor 2); show customary rates in the industry for the use of analogous inventions (Georgia-Pacific factor 12); and show rates upon which a licensor and a licensee would have reasonably and voluntarily agreed (Georgia-Pacific factor 15). See Georgia-Pacific v. U.S. Plywood Corp., 318 F. Supp. 1116, 1120 (S.D.N.Y. 1970) affs, 446 F.2d 295 (2nd Cir. 1971). SPH argues that because the licenses covering CDMA and WCDMA technology are relevant, there is little, if any, burden on Nokia to produce these agreements.

Nokia countered, arguing that the requested licenses-out and cross-licenses involve hundreds and potentially thousands of patents without listing the actual patent numbers or separately valuing the individual patents or technologies; they involve multiple parties and cell phone standards that are not issue in the case and thus are irrelevant to calculating reasonable royalty damages.

The court rejected Nokia's argument and ordered production of the license agreements:

The Court, however, is not moved by Nokia's argument that there is no possible relevance with regard to the licenses-out and cross-licenses. First, Nokia's licenses-out and cross-licenses provide information about how the telecommunications industry values CDMA and WCDMA technology and the licensing customs of the industry. [Footnote 5: Proctor & Gamble Co., 989 F. Supp. at 607-608 (citing Mobil Oil Corp. v Amoco Chem. Corp., 914 F. Supp. 1333, 1354 (D. Del. 1994) and 7 Chisum, Patents, 20.03[3][b][ii], at 20-182 to 184).] While these licenses may be extensive, involve multiple parties and hundreds of patents that make it difficult for an expert to attribute value to the small number of patents-in-suit, that is an argument that goes to the weight that a damages expert may give to a particular license agreement, not whether or not a license agreement is relevant or should be produced. The license agreements are relevant, even if only for the purposes of impeachment as cited by Nokia. [Footnote 6: Nokia cites a case with a similar request for these licenses, which were ultimately ordered to be produced, where the trial Court stated that the licenses were "to be used, if at all, for impeachment purposes only." See WiAV Solutions, LLC v. Motorola, Inc., et al., Civ. No. 3:09cv447 (E.D. Va. Filed July 14, 2009) at Dkt. 304, Order (May 25, 2010).] Fed. R. Civ. P. 26(b)(1). Based upon the foregoing, the Court finds the potential probative value of these licenses to outweigh the minimal burden of production. [Footnote 7: The only indication or claim of burden on behalf on [sic] Nokia is one sentence on page 10 of the joint statement [Doc. No. 434] where Nokia states, ". . . SPH's motion appears intended simply to unduly burden Nokia . . ."] As such, Nokia is ORDERED to produced [sic] the license agreements at issue to SPH on or before December 15, 2010.