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Epos Technologies et al. v. Pegasus Technologies et al.

January 31, 2012

EPOS TECHNOLOGIES ET AL.
v.
PEGASUS TECHNOLOGIES ET AL.



The opinion of the court was delivered by: William M. Nickerson Senior United States District Judge

MEMORANDUM AND ORDER

Both EPOS Technologies, Ltd. and Pegasus Technologies, Ltd. make digital pens that track the motion of a pen or marker and convert the movements for display on a computer. In 2007, EPOS sued Pegasus seeking a declaratory judgment that its products do not infringe on four of Pegasus' patents. Pegasus then counterclaimed and alleged infringement of six patents, including the first four at issue in EPOS' Complaint. Currently pending before the Court are two motions to compel discovery, one filed by (Pegasus), ECF No. 93, and one filed by (EPOS), ECF No. 97. The motions are fully briefed.*fn1 Upon a review of the pleadings and applicable case law, the Court determines that both motions will be granted in part and denied in part, as set forth below.

I. Pegasus' Motion

Pegasus has filed a motion to compel Plaintiff EPOS and Counter-Defendants Dane-Elect S.A., Dane-Elec Memory S.A., and Dane-Elec Corporation USA (collectively, Dane-Elec)*fn2 to produce additional documents and supplement their interrogatory responses. EPOS contends that it has adequately responded to all discovery requests. The crux of this dispute involves the question of whether EPOS is required to produce information about products other than the Zpen and particularly whether it must produce information about products that are still in development.

Pegasus has served on EPOS and Dane-Elec two sets of requests for production and two sets of interrogatories related to "accused products." In the first set, Pegasus provided the following definition of "accused products":

[A]ny product or service using ultrasonic location technology. This includes, but is not limited to pens and associated bases or flash drives bearing the mark, trademark, or designation Zpen and/or [EPOS/Dane-Elec]. Mot. Mem. at 3. In the second set of requests, Pegasus updated the definition of "accused product" in order to capture additional discovery so that it could accurately determine the scope of EPOS' and Dane-Elec's infringing activity:

[A]ny product or service concerning location technology related to writing or drawing. Accused products include, but are not limited to, (a) pens and associated bases or flash drives bearing the mark, trademark, or designation of "ZPEN," "Hello Kitty," "GPEN300," "INTELLIPEN," and/or "Epos" and any variants thereof; and (ii) pens that transmit or receive ultrasound that were made by or for [EPOS/Dane-Elec] and that were sent directly or indirectly to other entities, including, without limitation, Qualcomm and Motorola.

Id.; Reply at 1. The parties have met and conferred several times to discuss the proper scope of discovery related to "accused products," but have not been able to reach an agreement. EPOS memorialized its position in a letter dated August 24, 2011, stating:

Based on Pegasus' and Ludidia's April 8, 2011 Infringement Contention, Epos understands "accused products" to refer to the Dan-Elec Zpen . . . Until Pegasus and/or Luidia move to amend these contentions, only the Zpen stands properly accused of infringing the patents-in-suit. Epos has provided discovery on other products, including the Intellipen and IOGEAR GPEN300, but neither Pegasus nor Luidia has alleged that these products infringe the patents-in-suit.

Mot. Mem. at 5. In essence, EPOS objects to Pegasus' request for discovery relating to products other than those specifically named in the Infringement Contentions; as the Zpen is the only product specifically named, that is the only product for which it contends it has any discovery obligation.*fn3

The Court disagrees with the narrow position taken by EPOS. Case law from various circuits clearly states that there is no bright-line rule limiting discovery to only those products specifically accused in a party's infringement contentions.

See, e.g., O2 Micro Int'l, Ltd. v. Monolithic Power Sys., 467 F.3d 1355, 1363 (Fed. Cir. 2006); Honeywell Int'l, Inc. v. Acer Am. Corp., 655 F. Supp. 2d 650, 655-656 (E.D. Tex. 2009); Dr. Systems, Inc. v. Fujifilm Med. Sys. USA, Inc., No. 06-CV-417, 2008 WL 1734241 at *3 (S.D. Cal. April 10, 2008). Rather, the rule is that "[d]iscovery concerning products not explicitly listed in the infringement contentions is appropriate when: 1) the infringement contentions give notice of a specific theory of infringement; and 2) the products for which a plaintiff seeks discovery operate in a manner reasonably similar to that theory." Nidec Corp. v. LG Innotek Co., Ltd., No. 6:07-CV-108, 2009 WL 3673253, at *2 (E.D. Tex. Sept. 2, 2009) (citing Honeywell, 655 F. Supp. 2d at 655).

In its infringement contentions (ICs),*fn4 filed on April 8, 2011, Pegasus alleges that Defendants have infringed "by making, using, importing, selling, and/or offering for sale ultrasonic digital pens and software therefor including, without limitation, the 'DANE-ELEC'-brand Zpen ultrasonic digital pen." ECF No. 94-18. The ICs then go into further detail about the specific claims related to each patent. Based on the limited record and briefing as to this specific issue, the Court grants Pegasus' Motion to Compel insofar as EPOS is required to produce information related to products that are reasonably similar to the Zpen and for which it is on notice based on the theories of infringement alleged in the ICs. The Court notes that EPOS has already produced information related to similar products sold in the United States; though EPOS says it did this voluntarily, such information was in fact required to be produced based on the ICs and the discovery requests. Though the Court has no reason to believe it is the case, insofar as EPOS is in possession of not-yet-produced information regarding additional similar products, it is ordered to produce such information to Pegasus within seven days after the date of this order.

The Court, however, holds differently with respect to the EPOS products that are still being developed. Pegasus seeks information about products EPOS is developing with Motorola and Qualcomm, both of which were displayed in prototype form at the Mobile World Congress in Barcelona, Spain in February 2011. See ECF No. 94-19 (describing the EPOS-Qualcomm device); http://www.slashgear.com/epos-ultrasonic-pen-turns-your-table-into-a-tablet-video-14133516/, (last visited: January 30, 2012) (describing EPOS-Motorola device); see also Turbahn Decl.at ¶ 8 (ECF No. 99-10). Pegasus argues that it is entitled to receive information about these two devices in order to confirm whether they infringe on Pegasus' patents. Mot. Mem. at 8. The Chief Executive Officer of EPOS Development Ltd. stated in his declaration that the Qualcomm-EPOS pen referred to by Pegasus was a handmade pre-prototype pen, for which no commercial production has taken place. Turbahn Decl. at ¶ 8. He also stated that "the design of these products will change many times before any of the future generation products are ready for commercial production." Id. Requiring EPOS to produce information about these devices while they are still in development would not advance Pegasus' pending claims because there is not yet any final product that can be evaluated for infringement; the design is still in flux. The only conduct that has taken place with respect to these devices is ...

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