The Software IP Report

Past Licenses for Patents-NOT-in-Suit Relevant to a Reasonable Royalty

Could Sprint, having licensed its patents in settlement of litigation, be compelled, in defending subsequent, unrelated litigation, to produce documents related to these licenses?  In a word, yes.  A magistrate judge granted plaintiff High Point’s motion to compel production of Sprint’s license agreements and expert reports, although denying the motion with respect to Sprint’s communications with its licensee.  High Point SARL v. Sprint Nextel Corp., No. 09-2269 (D. Kans. April 30, 2012).

High Point had sued Sprint over patents related to replacing certain circuit-switched portions of conventional telecommunications networks with packet-switched components for cellular communications.  Sprint had settled an earlier lawsuit with Vonage over Sprint’s patents related to VoIP technology.

Sprint argued that, in previously sustaining Sprint’s relevance objection to an interrogatory related to VoIP technology, the court had already found VoIP technology was not relevant in the instant case.  However, the court noted that interrogatories and document requests are different discovery vehicles, and stated that the interrogatory previously at issue and the document request now at issue requested different information.  Therefore, the court was willing to hear High Point’s motion to compel production.

Turning to the issue of relevance, the court considered High Point’s argument that Sprint’s VoIP agreements were “relevant to the determination of a reasonable royalty under” some of the factors set forth in Georgia-Pacific Corp. v. U.S. Plywood Corp., 9318 F. Supp. 1116, 1120 (S.D.N.Y. 1970).  The magistrate judge here agreed that “Sprint’s VoIP patent license and settlement agreements” were relevant under Georgia-Pacific “for determination of a reasonable royalty.”  Moreover, VoIP technology and the technology of the patents-in-suit were comparable enough to be relevant to one another “for purposes of establishing relevancy to a reasonable royalty calculation.”

Two recent Federal Circuit cases discussing the evidentiary bases required for the Georgia Pacific factors, Lucent Technologies, Inc. v. Gateway, Inc., 580 F.3d 1301 (Fed. Cir. 2009), and, Inc. v. Lansa, Inc., 594 F.3d 860 (Fed. Cir. 2010), did not change this conclusion; to be discoverable, documents need not necessarily be admissible at trial, and the documents requested here were at a minimum reasonably calculated to lead to the discovery of admissible evidence.  Further, the court agreed that licenses for the patents-in-suit might be more relevant, but that did not make Sprint’s VoIP licenses irrelevant.

In addition to Sprint’s license agreements, the magistrate judge ordered production of Sprint’s expert’s report and deposition testimony from its Vonage VoIP litigation.  High Point had available to it the expert’s public trial testimony, but had reasonably argued that the detailed methodology concerning how the expert arrived a reasonable royalty, likely contained only in the expert’s written report and deposition testimony, was relevant.

Finally, the magistrate judge denied High Point’s motion to compel production of Sprint’s settlement indications with Vonage.