10-595 (special master op)

8/6/2019 10-595 (Special Master Op)

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David A. WhitePartner

T. 302.984.6370F. [email protected]

McCarter & English, LLP

Renaissance Centre405 N. King Street, 8th FloorWilmington, DE 19801-3717T. 302.984.6300F. 302.984.6399www.mccarter.com

BOSTON

HARTFORD

NEW YORK

NEWARK

PHILADELPHIA

STAMFORD

WILMINGTON

June 15, 2011

Via Electronic Delivery

Dominick T. GattusoProctor Heyman LLP

1116 N. West Street

Wilmington, Delaware 19801

Jack B. Blumenfeld

Morris, Nichols, Arsht & Tunnell LLP

1201 North Market Street, P.O. Box 1347Wilmington, Delaware 19899

Re: XPRT Ventures, LLC v. eBay, Inc., et al.

C.A. No. 1:10-cv-00595-SLR

Dear Counsel:

This letter shall serve as my decision and order concerning Plaintiff XPRT

Ventures, LLCs (XPRT or Plaintiff) request for an order compelling

Defendants eBay Inc., PayPal, Inc., Bill Me Later, Inc., Shopping.com, Inc. and

Stubhub, Inc. (collectively, the Defendants) to produce documents from the

relevant time frame and from certain named custodians (the Motion).

Procedural History

On July 13, 2010, XPRT filed suit against the Defendants, in which XPRT

sought declaratory relief and monetary damages, among other forms of relief, under

the following legal theories: patent infringement; misappropriation of trade secrets;

conversion; and unjust enrichment. XPRT filed the First Amended Complaint on

September 30, 2010 which reduced the allegations to one of patent infringement


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concerning six (6) specific patents (the Amended Complaint). XPRT alleges that

its patents teach in alternative embodiments to the traditional payment vehicle of

bank draft or credit card, thus allowing the user to streamline e-commerce

transactions and electronic auctions by avoiding the necessity of using specific credit

card and bank data for each and every purchase in an e-commerce transaction, or an

electronic auction transaction. Amended Complaint, 16. The patents at-issue

purportedly addressed a flaw in Defendant eBays operations, and its inventors,

George Likourezos and Michael Scaturro, brought their yet-to-be published patent

applications to the attention of eBay in 2001 (the Patent Applications). See

Amended Complaint, 29, 34-39. In 2003, individuals applied for a patent on behalf

of eBay; the eBay patent application purportedly included the automatic payment

system invented by Messrs. Likourezos and Scaturro[,] yet it did not reference the

Patent Applications. See Amended Complaint, 64. The eBay patent application

was ultimately rejected. See Amended Complaint, 76. Thereafter, eBay would

purchase several entities, and the Defendants operating systems purportedly

incorporated specifications of the Patent Applications. See Amended Complaint,

80. XPRT notified eBay of its suspicion in written form. See Amended Complaint,

53-54, 74. The patents at-issue were approved in 2009. See Amended Complaint,

86, 99, 109, 123, 134, 145.

On October 18, 2010, Defendants filed their Answer to the Amended

Complaint and Counterclaims against XPRT (the Answer). The Answer largely


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denied the allegations set forth in the Amended Complaint, and the Defendants

asserted several affirmative defenses, including invalidity and non-infringement of

the patents at-issue. See Answer, 155-65. The Answer also includes several

counterclaims for declaratory relief, in which the Defendants seek a declaration that

(a) they did not violate the patents at-issue; and (b) the patents at-issue are invalid.

See Answer, 179-80, 182.

XPRT filed an answer to the Defendants counterclaims on November 10,

2010 (Answer to Counterclaim). XPRT referenced the allegations set forth in the

Amended Complaint where appropriate and denied the remaining allegations. See

Answer to Counterclaim, 166-224. XPRT also asserted several affirmative

defenses, most notably, the validity of the patents at-issue. See Answer to

Counterclaim.

On January 14, 2011, the Court entered a scheduling order which governs

the administration of this litigation (the Order). The Order provides that

[d]iscovery will be needed on the following subjects: infringement, validity and the

defenses asserted. Order, 2(b). The Order also states:

In the absence of agreement among the parties or by order of thecourt: (a) e-discovery shall be limited to the initial custodians

identified through the D. Del. 16.1(a) meeting; (b) e-discovery

shall be limited to the period beginning January 1, 1998 to thepresent; (c) on or before April 8, 2011, each party may request e-

discovery of additional custodians or for additional years, for

good cause shown; and (iv) no deposition (other than those


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noticed under Fed. R. Civ. P. 30(b)(6) shall be scheduled prior tothe completion of e-discovery.

Order, 2(c)(4). The contents of the Order were purportedly the subject of

negotiation between the parties.

Relevant Facts

On or about March 21, 2011, Defendants served their Objections and

Responses to XPRTs First Set of Document Requests. XPRT and the Defendants

subsequently discussed their discovery efforts and reached an agreement as to a

number of disputes. However, the parties have not been able to resolve the

Defendants objection as to the temporal scope of their document search.

Specifically, the Defendants maintain that they will not conduct a keyword search for

the entire period of time set forth in the Order; rather, the Defendants agreed to use

certain keywords to search their custodians files during certain time periods for

evidence of invalidity and infringement. See Motion, Exh. 9. Additionally, the

parties have not been able to resolve XPRTs request to expand the number of

custodians despite several teleconferences and an exchange of correspondence.1

On May 2, 2011, XPRT filed the Motion. The Motion seeks an order

compelling the Defendants to (a) expand the temporal scope of their existing search

1XPRT first sought to expand the number of custodians in its March 8, 2011 letter to the Defendants

(the March 8 Notice). See Motion, Exh. 13. XPRT requested the search of the files of additional

custodians in its April 14, 2011 letter (the April 14 Notice). See Motion, Exh. 15. XPRT

purportedly learned of the individuals identified in its April 14, 2011 letter through the Rule 30(b)(6)

Deposition of Defendant eBay, Inc. See id.


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for documents to the period of time set forth in the Order; and (b) to include the

names of seventeen (17) additional custodians within their search for responsive

documents.2 See Motion, p. 1. In support of their request to expand the temporal

scope of the Defendants existing search, XPRT asserts that the Defendants conduct

runs afoul of the dates identified in Paragraph 2 of the Order and the broad discovery

standard followed in this jurisdiction. See Motion, pp. 8-9. XPRT also maintains

that the requested relief will result in the discovery of documents relevant to the

claims, counterclaims, and defenses at issue in the Amended Complaint. Motion, p.

10. With respect to their request to include additional custodians, XPRT questions

why the Defendants did not disclose the identity of some of these individuals prior

to the Rule 16 Conference, all of whom are or were employed by the Defendants.

See Motion, p. 13. XPRT further asserts that although not required, it possesses

good cause to allow for the inclusion of the additional custodians. See Motion, pp.

13-14.

On May 16, 2011, the Defendants filed their written opposition to the

Motion (the Opposition). The Defendants contend that the scope of the search

must be limited, in some manner, on the basis of waiver, relevance and cost. See

Opposition, pp. 12-15. They have taken the specific position that a search for

documents should be limited, in light of the claims and defenses asserted, to: (a) the

2 XPRT seeks to include the following individuals: Brian Ankenbrandt; Matthew Brigham; Michael

Jacobson; Andre L. Marais; Jay Monahan; Jeffrey Randall; Peter Thiel; Emily Ward; Renee Gentry;

Jeffrey Herman; Ngan-Ha D. Nguyen; Hubie Chou; Paula Cramer; John Muller; Vamsee Nalamothu;

Brian Phillips; and Jeffrey Spaulding.


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time period preceding the filing of XPRTs 09/746,618 2001 patent application; and

(b) the time period following the date in January 2009 when XPRTs earliest patent

was issued. See Opposition, p. 5. Additionally, they maintain that XPRT failed to

show good cause under the Order to include the additional custodians as well as the

contention that an expanded search is irrelevant to this phase of the litigation. See

Opposition, pp. 15-16. The Defendants assert further argument with respect to the

individual custodians sought to be included in the document search, like legal

privilege. See Opposition, pp. 17-19. Finally, the Defendants contend that to the

extent that the requested relief is granted, XPRT must bear some, if not all of the

expenses incurred as a result of the expanded search. See Opposition, pp. 19-20.

On May 23, 2011, XPRT submitted their reply brief in support of the Motion

(the Reply). The Plaintiff maintains that the relief sought herein falls within the

broad discovery standard, specifically that the requested information is relevant to

the purported long felt, but unresolved need for the patents at-issue. See Reply, pp.

2, 5. Further, to the extent that the requests implicate privileged information, XPRT

insists that the Defendants must produce a privilege log, rather than refuse to

produce the discovery altogether. See Reply, p. 6. Finally, the Plaintiffs do not

believe that its discovery requests are unreasonable, nor does it carry a significant

expense to justify a fee shifting arrangement. See Reply, pp. 7-8.


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Following the conclusion of briefing and at the request of the Defendants,

oral argument was held in the office of the Special Discovery Master (the Special

Master or Court) on June 10, 2011.

Legal Framework

Federal Rule 37 provides that [o]n notice to other parties and all affected

persons, a party may move for an order compelling disclosure or discovery. FED.R.

CIV.P. 37(a)(1). The motion must include a certification that the movant has acted

in good faith to resolve the discovery dispute without judicial intervention. See id.

The moving party must establish that it sought discovery in accordance with the

Federal Rules. See SWIMC, Inc. v. Hy-Tec Thermal Solutions, LLC, 2009 U.S. Dist.

LEXIS 53528, at *7 (D. Del. June 24, 2009). Once the moving party has shown that

discovery is proper, the responding party must demonstrate why its objection should

be upheld. See generally Inventio AG v. Thyseenkrupp Elevators Americas Corp.,

2009 U.S. Dist. LEXIS 67281, at *6 (D. Del. July 31, 2009).

Federal Rule 26 provides that [p]arties may obtain discovery regarding any

nonprivileged matter that is relevant to any partys claim or defense - including the

existence, description, nature, custody, condition, and location of any documents or

other tangible things and the identity and location of persons who know of any


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discoverable matter. FED.R.CIV.P.26(b)(1).3

The standard of relevance is not one

of admissibility; rather, the sought-after information must appear[] reasonably

calculated to lead to the discovery of admissible evidence. Id.; see also Norguard

Ins. Co. v. Serveon, Inc., 2011 U.S. Dist. LEXIS 8371, at *10-11 (D. Del. Jan. 28,

2011). The courts have generally interpreted such standard to allow broad and

liberal discovery. WebXchange, Inc. v. Dell, Inc., 2010 U.S. Dist. LEXIS 77449, at

*3 (D. Del. July 30, 2010) (quoting Pacitti v. Macys, 193 F.3d 766, 777 (3d Cir.

1999)).

Analysis And Discussion

A. The Temporal Scope of the Document Search

XPRTs demand that the Defendants conduct their search for documents

based on the time period set forth in the Order is a question of relevance. For

purposes of discovery, relevancy is broadly construed. Inventio AG, 2009 U.S.

3 TheInventio AG court explained that there are three concentric circles of discovery material which

direct different obligations upon the parties depending upon the nature of the information involved.

Inventio AG, 2009 U.S. Dist. LEXIS 94723, at *9. The obligations are as follows:

First, Rule 26 envisions the exchange by the parties of information that is

integral to the litigation, such as the identities of individuals likely to have

discoverable information and copies of documents which support a claim ordefense, without the necessity of a discovery request. [Citation omitted].

Second, Rule 26 provides for the disclosure of nonprivileged information that

is relevant to any partys claim or defense upon a request from the party

seeking the discoverable material. [Citation omitted]. Third, Rule 26 permits a

court to order broader discovery of any matter relevant to the subject matter

involved in the action, where such information is likely to lead to the

discovery of admissible evidence and the party making the discovery request

can establish good cause to support the request.

Id.


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Dist. LEXIS 94723, at *11 (citing Pacitti, 193 F.3d at 777-78). Relevance, however,

is not without limitation, as [t]he probative value of the information requested

should be balanced against the costs and burdens imposed upon the producing

party. Id. As the Defendants have questioned the relevance of the additional

information sought herein, the burden falls upon XPRT to establish a connection

between the requested discovery and the claims and defenses asserted in this

litigation. See id.

1. Case Scheduling Order

XPRT first seeks to gain relief through its reliance upon Paragraph 2(c)(4)(ii)

of the Order. This paragraph provides that e-discovery shall be limited to the period

beginning January 1, 1998 to the present[.] Order, 2(c)(4)(ii). Contrary to

XPRTs assertions, Paragraph 2(c)(4)(ii) of the Order itself does not establish the

scope of relevance in this litigation. If the parties intended for Paragraph 2(c)(4)(ii)

of the Order to define the boundaries of relevance, critical language, like the term

relevance, should have been included, and the Special Master cannot alter the

Order to remedy this omission. Therefore, XPRTs reliance upon the Order to

establish the boundaries of relevance fails to pass muster.

2. Secondary Considerations Of Nonobviousness

XPRT seeks monetary damages and other relief based on its claim that the

Defendants have infringed upon the patents at-issue. See Amended Complaint. The


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Defendants deny wrongdoing; assert that the patents at-issue are invalid; and seek

declaratory relief that the patents at-issue are invalid and unenforceable. See

Answer. Accordingly, the issue of obviousness will prove relevant to this phase of

the litigation.

The concept of obviousness is well known to the parties.4 A patent may not

be obtained if the differences between the subject matter sought to be patented

and the prior art are such that the subject matter as a whole would have been obvious

at the time the invention was made to a person having ordinary skill in the art to

which said subject matter pertains. See 35 U.S.C. 103(a). The courts have held

that obviousness is a question of law which requires a factual inquiry concerning (1)

the scope and content of the prior art; (2) the level of ordinary skill in the art; (3) the

differences between the claimed subject matter and the prior art; and (4) secondary

considerations of nonobviousness, such as commercial success, long felt but

unresolved need, failure of others, and acquiescence of others in the industry that the

patent is valid, and unexpected results.5 Alza Corp. v. Andrx Pharm., LLC, 607 F.

Supp. 2d 614, 631 (D. Del. 2009) (citing Graham v. John Deere Co., 383 U.S. 1, 17-

4A party seeking to challenge the validity of a patent based on obviousness must demonstrate by

clear and convincing evidence that the invention described in the patent would have been obvious to

a person of ordinary skill in the art at the time the invention was made. Aventis Pharma S.A. v.

Hospira, Inc., 743 F. Supp. 2d 305, 336 (D. Del. 2010).5

The courts may also consider evidence of copying of the invention by those within the industry;

whether the invention was contrary to accepted wisdom of the prior art; skepticism by those skilled in

the art upon learning of the invention; praise for the invention from those within the industry; and

independent invention by others. See Scimed Life Sys., Inc. v. Johnson & Johnson, 225 F. Supp. 2d

422, 440 (D. Del. 2002) (citing Graham, 383 U.S. at 17-18).


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18 (1966)); see Leader Techs., Inc. v. Facebook, Inc., 2011 U.S. Dist. LEXIS 25308,

at *40 (D. Del. Mar. 14, 2011) (An obviousness determination [under 103] is not

the result of a rigid formula disassociated from the consideration of the facts of a

case.). Secondary considerations of nonobviousness command substantial weight

only when there is a nexus established between the merits of the claimed invention

and the evidence proffered on secondary considerations. See Imperial Chem.

Indus., PLC v. Danbury Pharmacal, Inc., 745 F. Supp. 998, 1012 (D. Del. 1990);

Proctor & Gamble Co. v. Teva Pharm. USA, 566 F.3d 989, 998 (Fed. Cir. 2009)

(When present, such factors may often be the most probative and cogent evidence

[of non-obviousness] in the record.) (quoting Stratoflex, Inc. v. Aeroquip Corp.,

713 F.2d 1530, 1538 (Fed. Cir. 1983)).

XPRT argues that the requested information will support its underlying

causes of action as well as claims concerning commercial success, long felt need and

copying.6 See Motion, p. 10; Reply, p. 2. As the Defendants have not limited their

document search and production related to the issue of commercial success, see

Opposition, p. 14, XPRTs relevance argument solely relates to the patent

infringement claims and secondary considerations of copying and long felt need. See

Opposition, p. 14; Reply, p. 2.

6 Once aprima facie case of obviousness has been established, the burden shifts to the applicant to

come forward with evidence of secondary considerations of non-obviousness to overcome the prima

facie case. Santarus, Inc. v. Par Pharm., Inc., 720 F. Supp. 2d 427, 453 (D. Del. 2010).


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a. Patent Infringement

XPRT bears the burden of establishing infringement. See Medtronic, Inc. v.

Boston Scientific Corp., 2011 U.S. Dist. LEXIS 33581, at *25 (D. Del. Mar. 30,

2011). Generally speaking, a patent may not be infringed until it has been issued.

While the law allows for specific causes of action which could implicate events

preceding the issuance of a patent, XPRT has not asserted any such claims in this

litigation. See Amended Complaint, 84-154. Thus, the requested relief is not

relevant to the Plaintiffs claims of patent infringement. See FED.R.CIV.P.26(b)(1).

b. Copying

[C]opying requires evidence of efforts to replicate a specific product, which

may be demonstrated through internal company documents, direct evidence such as

disassembling a patented prototype, photographing its features, and using the

photograph as a blueprint to build a replica, or access to the patented product

combined with substantial similarity to the patented product. Wyers v. Master Lock

Co., 616 F.3d 1231, 1246 (Fed. Cir. 2010) (citing Iron Grip Barbell Co. v. USA

Sports, Inc., 392 F.3d. 1317, 1325 (Fed. Cir. 2004)). Further, every competing

product that falls within the scope of the patent does not necessarily constitute proof

of copying; otherwise, every infringement suit would automatically confirm the

nonobviousness of the patent. Id. (quoting Iron Grip Barbell Co., 392 F.3d at

1325). Here, XPRT has not shown how or why the requested information touches


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upon the issue of copying. See Inventio AG, 2009 U.S. Dist. LEXIS 94723, at *11.

A blanket statement that the sought-after information relates to the Defendants

copying or use of [XPRT]s patent applications and patented materials[] is

insufficient and, thus, XPRT has not met its burden. Motion, p. 10.

c. Long Felt But Unresolved Need

A number of courts have evaluated evidence of long felt need from the time of

the filing of the patent application. See, e.g., Perfect Web Techs., Inc. v. Infousa,

Inc., 587 F.3d 1324, 1332 (Fed. Cir. 2009) (Evidence that an invention satisfied a

long-felt and unmet need that existed on the patents filing date is a secondary

consideration of evidence.); Proctor & Gamble Co., 566 F.3d at 998 ([W]e look to

the filing date of the challenged invention to assess the presence of a long-felt and

unmet need.); Astra-Sjuco, A.B. v. USITC, 629 F.2d 682, 689-90 (C.C.P.A. 1980).

However, each of the above-referenced cases addressed the issue in the context of

admissibility and/or the weight of the evidence. The present dispute concerns

discovery, which carries a less stringent standard. See Norguard Ins. Co., 2011 U.S.

Dist. LEXIS 8371, at *11 (Relevance is measured not by admissibility, but by

whether the information bears on, or that reasonably could lead to other matter that

could bear on, any issue that is or may be in the case.).

Here, the Plaintiff alleges that [t]hrough PayPal, eBay has become the pre-

eminent leader in the online payment arena and significant portions of eBays PayPal


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activities read directly on XPRTs patents claims. Amended Complaint, 18.

Further, personnel, on behalf of Defendant eBay, submitted a patent application

which purportedly included the automatic payment concepts described in the

Patent Applications. Amended Complaint, 65. The acquisition of Defendant

PayPal and the filing of the patent applications on behalf of Defendant eBay each

followed the date on which the Patent Applications were filed. It stands to reason

that Defendant eBay and/or its agents possessed some motivation to take this action,

for example, a recognized need of the company or an issue within the industry that

needed to be addressed. In light of the allegations set forth in the Amended

Complaint, the Defendants likely possess documents concerning the need for

technology similar to that covered in the Patent Applications. Accordingly, limited,

additional discovery of long felt but unresolved need is warranted.

d. Balancing Of Interests

XPRT demands that the Defendants undertake a search of their documents for

evidence of long felt need over a thirteen (13) year period (January 1, 1998 -

Present). See Motion, p. 1. The scope of the request exceeds the broad discovery

standard in its entirety in that a blanket search of the Defendants records for a

thirteen (13) year period is not reasonably calculated to lead to the discovery of

admissible evidence concerning long felt need. Compare Inventio AG, 2009 U.S.

Dist. LEXIS 94723, at *11. Further, the burden and expense associated with a


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moving party. Frederick v. Avantix Lab., Inc., 2011 U.S. Dist. LEXIS 32765, at *5

(D. Del. Mar. 29, 2011) (quoting Requette Freres v. SPI Pharma, Inc., 2009 U.S.

Dist. LEXIS 43740, at *13 (D. Del. May 21, 2009)); Pettinaro Enter., LLC v.

Continental Cas. Co., 2010 U.S. Dist. LEXIS 115305, at *6 (D. Del. Oct. 29, 2010).

The movant must demonstrate that, despite diligence, the proposed claims could not

have been reasonably sought in a timely manner. Requette Freres, 2009 U.S. Dist.

LEXIS 43740, at *13 (discussing FED.R.CIV.P. 16(b) in the context of a plaintiff

seeking to amend the pleadings following the expiration of the deadline set forth in

the case scheduling order); see also Dow Chem. Can. Inc. v. HRD Corp., 2009 U.S.

Dist. LEXIS 108802, at *3 (D. Del. Sept. 24, 2009) (finding, in the context of a

discovery dispute, that the movant must demonstrate that the discovery sought

could not have been obtained within the allowed discovery period.).

Within this discussion, the attitude of the courts toward discovery cannot be

ignored. See BAE Sys. v. Aircraft Controls, Inc., 224 F.R.D. 581, 589 (D. Del. 2004)

(Courts in this jurisdiction have a liberal discovery policy, permitting full disclosure

of information except in situations where compelling circumstances warrant

protection of the information.). A liberal interpretation of the discovery rules will

afford the parties opportunities to obtain the fullest possible knowledge of the issues

and facts prior to trial. Hicks v. Feeney, 124 F.R.D. 79, 82 (D. Del. 1987). And, the

courts possess broad powers to ensure full and fair disclosure of information between

the parties. See Inventio AG, 2009 U.S. Dist. LEXIS 94723, at *11.


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The Defendants arguments emphasize the timing and manner in which XPRT

sought to include the additional custodians. It is true that XPRT named seven (7) of

the seventeen (17) custodians in the Amended Complaint, see Amended Complaint,

35, 45, 52, 54, 55, 66, 71, yet they failed to identify these individuals until their

supplemental initial disclosures following the Rule 16 Conference. Further, the

Plaintiff likely knew of three (3) additional custodians and their involvement in the

preparation of Defendant eBays patent applications at the initial pleadings stage.

However, XPRT did not think to include these persons in its initial disclosures until

after the Rule 16 Conference. Despite this brief delay, the Plaintiffs subsequently

took action, in the form of supplemental disclosures and the March 8 Notice, to

demand that the Defendants search these individuals files for responsive

documents.9

Finally, XPRT seeks to include six (6) individuals as custodians who

were purportedly identified for the first time in the Rule 30(b)(6) Deposition of

Defendant eBay, Inc. The Defendants do not appear to dispute the timeliness of

XPRTs request or its offer of good cause as to five (5) of the individuals; rather, the

dispute largely concerns the timing of the sixth member of this group, John Muller.10

See Opposition, pp. 8, 10, 17-19. While the Plaintiffs could have learned of Mr.

Mullers position via the Internet, the Defendants notice argument assumes that the

9 The Defendants failure to include these individuals in their initial disclosures or supplement such

disclosures to include others persons who may possess discoverable information is not lost on the

Court. FED.R.CIV.P. 26(a)(1)(A).10 Mr. Muller served as General Counsel for Defendant PayPal during a portion of the relevant time

period, and his position at Defendant PayPal was listed on the companys website. See Opposition, p.

19.


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likely to be relevant to the defense and counter-claims asserted by Defendants[.]

Id.

Michael Jacobson - He served as Vice President and General Counsel for

Defendant eBay during some or all of the relevant time period. XPRT

alleges that Mr. Jacobson learned of the publication of four (4) patent

applications on or about July 29, 2002. See Amended Complaint, 52.

Plaintiff alleges that he was informed of the publication of an additional

patent application in January 2007; Likourezos also notified him that

Defendant eBays PayPal Buyer Credit Program and incentive program,

which utilized the PayPal payment services, were within the scope of at

least one of the published claims of his patent application. See Amended

Complaint, 78. In his role as Vice President and General Counsel of

Defendant eBay, he likely took part in subsequent discussions with business

and legal personnel. These communications likely concerned the validity of

and potential economic benefit to be derived from the information included

in the Patent Applications.

Jay Monahan - He served as Associate General Counsel for Defendant eBay

during some or all of the relevant time period. XPRT alleges that Mr.

Monahan learned of the Patent Applications in September 2001, and that

Likourezos proposed an exclusive opportunity to eBay to review the

applications under confidence during a period before they were publicly

available. Amended Complaint, 33-34, 45. Plaintiff also contends that

Mr. Monahan received written notice that Defendant eBays newly-

announced payment features were within the scope of the published claims

of Likourezos and Scaturro. See Amended Complaint, 53. Mr. Monahan

stood in a unique position related to Defendant eBays discovery and


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understanding of the Patent Applications. His relationship, as alleged in the

Amended Complaint, suggests that he may possess documents which are

relevant to the claims, defenses and counterclaims asserted in this litigation.

Peter Thiel - He served as Chairman, President and CEO of Defendant

PayPal, Inc. during some or all of the relevant time frame. XPRT alleges

that he was notified that PayPals Winning Bidder Notification feature

when used in the eBay auction system was within the scope of one or more

of the [i]nventors published claims. Amended Complaint, 54. Thisallegation underlines Plaintiffs present discovery request in which XPRT

has reason to believe [that] his files contain documents and information

regarding XPRTs patents and patent applications, communications with

XPRT, and the scope of Defendants infringement. Motion, p. 16; see also

Motion, Exh. 13. His interaction with Likourezos, as alleged in the

Amended Complaint, suggests that he may possess documents which are


Emily Ward - She served as Senior Patent Counsel for Defendant eBay

during some or all of the relevant time period. XPRT alleges that Ms. Ward

unilaterally changed an agreement between Defendant eBay and

Likourezos. See Amended Complaint, 64. Plaintiff also alleges that she

knew of the 2001 patent applications, yet failed to disclose its existence to

the United States Patent And Trademark Office (USPTO) for a number of

years. See Amended Complaint, 67-68. At the Rule 30(b)(6) Deposition

of Defendant eBay, the corporate designee disclosed a document

concerning the various deposition topics. See Motion, Exh. 1. This

document listed Ms. Ward under one of the topics - Intellectual Property,

including, but not limited to eBays development of Patents, research

regarding existing Patents, and legal opinions relating to Patents[.] Id. In


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light of the allegations and the deposition testimony elicited thus far, it is

reasonable to conclude that Ms. Ward may possess documents which are


The Defendants object to the inclusion of these individuals as additional

custodians on the grounds that they previously agreed to produce all communications

between XPRT and the Defendants as well as all non-privileged documents related

to such communications; the responsive documents may be privileged and, thus,

protected from disclosure; the requested relief is overly broad; and the process of

identifying and gathering the sought-after documents carries an unreasonable

expense. See Opposition, p. 11, 15-16. In light of the Courts finding that Messrs.

Jacobson, Monahan and Thiel as well as Ms. Ward could possess relevant

documents, the Defendants objections must be examined in greater detail.

An objection to the inclusion of these individuals as custodians, on the basis

of legal privilege, is premature. The Defendants bear the burden of establishing the

legal privilege. See generally Robert Bosch LLC v. Pylon Manuf. Corp., 263 F.R.D.

142, 145 (D. Del. 2009) (A party seeking to invoke the attorney-client privilege has

the burden of establishing the existence of an attorney-client privilege relationship

and the confidential nature of the privilege.). However, they have not asserted the

applicable privilege, stated to whom the protection applies or identified the

allegedly-privileged document(s). See Opposition. The Defendants are likely

incapable of satisfying these basic requirements at this initial stage, as they have not


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included the individuals as custodians or undertaken any search for the requested

documents. An assertion of legal privilege as a means to withhold documents,

therefore, is premature.

The Defendants also object to the inclusion of these individuals on grounds

that the document collection will be absurdly overbroad, likely to result in a

voluminous and costly privilege log, and not likely to result in relevant

documents[.] Motion, p. 16. The Court, as explained above, has already concluded

that certain individuals may possess relevant documents. While the Defendants have

agreed to produce all communications between the parties and documents related

thereto, it is likely that the subject of such communications, including, but not

limited to discussions concerning the purported economic benefit and violation of the

patents at-issue, resulted in a number of additional conversations among different

groups of individuals. The inclusion of these individuals as custodians will allow for

a thorough search and more complete production. Further, to the extent that the

Defendants contend that a search of these individuals files will be duplicative, they

have not offered any specific evidence, aside from a statement concerning the

volume of their production thus far, which explains how or in what manner the

search will lead to the production of documents that have already been exchanged.

See Inventio AG, 2009 U.S. Dist. LEXIS 67281, at *6. Finally, the use of keyword

search terms and de-duplication methods will reduce the scope of the electronic

discovery effort.


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of Defendants infringement. Motion, p. 18. It also contends that this group

participated in discussions with Likourezos and therefore were likely to have

additional, non-privileged correspondence that is likely relevant to XPRTs claims of

infringement. Id.

Brian Ankenbrandt - XPRT alleges that Mr. Ankenbrandt submitted a

draft Agreement for Receipt of Patent Application Information

(NDA) in November 2002; and that he received two (2) preliminary

amendments from Likourezos concerning the Patent Applications. See

Amended Complaint, 58, 71. In light of his initial involvement, Mr.

Ankenbrandt could possess documents relevant to the claims, defenses

and counterclaims asserted in this litigation.

Matthew Brigham - While the Amended Complaint does not reference

Mr. Brigham, the March 8 Notice states that he served as outside

counsel for Defendants during some or all of the relevant time frame.

[Accordingly,] XRPT has reason to believe his files contain information

regarding XPRTs patents and patent applications, communications with

XPRT, and the scope of[.] Motion, Exh. 13.15 No additional

information has been provided. Since Mr. Brighams role and level of

participation in this litigation is not currently known, the Court cannot

find that XPRT satisfied its burden under the rules of discovery. See

Inventio AG, 2009 U.S. Dist. LEXIS 94723, at *11.

Andre Marais - XPRT alleges that Mr. Marais received copies of the

applications for the patents at-issue in September 2001. See Amended

Complaint, 35-37. Plaintiff also alleges that Likourezos informed him

15 The March 8 Notice did not provide any additional information concerning Mr. Brigham other than

the information quoted above. See Motion, Exh. 13.


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of the significant business advantage that the patents at-issue could

provide. Amended Complaint, 38-39. Thereafter, Mr. Marais

purportedly conducted a review and analysis of the submitted materials

on behalf of Defendant eBay. See Amended Complaint, 44. It is also

alleged that Mr. Marais participated in the drafting of the Patent

Applications, which Defendant eBay submitted for approval on or about

April 30, 2003. See Amended Complaint, 63. Given the extent of Mr.

Marais alleged involvement, the Court finds that he could possess

documents relevant to the claims, defenses and counterclaims asserted in

this litigation.

Jeffrey Randall - XPRT alleges that Mr. Randall requested the file

histories of the four patent applications, which, on information and belief,

he could not obtain from the USPTO. Amended Complaint, 55. The

Plaintiff did not make any additional averments concerning Mr. Randall,

aside from a request that he execute a confidentiality agreement on behalf

of Defendant eBay. See generally Amended Complaint. The nature of

Mr. Randalls request suggests that he may possess documents relevant to

the claims, defenses and counterclaims asserted in this litigation.

The Defendants object to the inclusion of these individuals as additional

custodians based on the argument that the requested information is not within their

possession, custody or control; is likely protected from disclosure on account of legal

privilege; is overly broad in scope; and poses an unnecessary and considerable

expense. See Opposition, pp. 9, 15-16. The Defendants added that the Court should

also consider their agreement to produce all communications between XPRT and

Defendants as well as non-privileged documents relating to communications


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between eBay and XPRT[.] Motion, p. 16. In light of the Courts finding that

Messrs. Ankenbrandt, Marais and Randall could possess documents relevant to this

phase of the litigation, the Defendants objections must also be examined in greater

detail.

Federal Rule of Civil Procedure 34 provides that a party must produce all

relevant, non-privileged documents within its possession, custody or control. FED.

R. CIV. P. 34(a). None of the individuals identified above are employees of the

Defendants or their subsidiaries. Rather, each of these individuals are attorneys

employed by separate and distinct legal entities which are not parties to this

litigation. The Court has defined the term, control, as the legal right to obtain the

documents required on demand. Inline Connection Corp. v. AOL Time Warner,

Inc., 2006 U.S. Dist. LEXIS 72724, at *3 (D. Del. Oct. 5, 2006) (quoting Power

Integrations, Inc. v. Fairchild Semiconductor Intl, Inc., 233 F.R.D. 143, 145 (D.

Del. 2005)). Notwithstanding developments in other circuits, this Court has resisted

the urge to expand its definition of control beyond the legal rights of a litigant to

include a partys practical ability to obtained the requested documents. See id. at *7-

8 (citing Power Integrations, Inc., 233 F.R.D. at 146). Therefore, XPRTs reliance

upon a 2000 decision from the District of Maryland is not persuasive. See Poole v.

Textron,Inc., 192 F.R.D. 494, 501 (D. Md. 2000) (As long as the party has the legal

right or ability to obtain the documents from another source on demand, that party is

deemed to have control.). Where each of the above individuals are employed by a


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may prepare a privilege log. Further, the Defendants need not produce documents

belonging to the Inventors which have been included in prior productions. However,

blanket assertions of duplication and waste will not suffice, as the Defendants must

show how a search of the Inventors files will be similar to a review already taken of

an existing custodian. No such proof has been provided; in fact, counsel for the

Defendants represented at oral argument that the Defendants have only offered to

undertake a limited search concerning the patent applications filed on behalf of

Defendant eBay. See Transcript, p. 56. The Defendants showing falls short, and the

objections are overruled. Accordingly, the Defendants shall be required to include

Messrs. Gentry, Herman and Nguyen as custodians.

3. Individuals Purportedly Identified Through The Rule 30(b)(6)

Deposition Of Defendant eBay18

XPRT seeks to include six (6) individuals as record custodians who were

purportedly identified for the first time in the Rule 30(b)(6) Deposition of Defendant

eBay, Inc. on April 6, 2011 (the Newly-Discovered Personnel). The Plaintiff

contends that each of the Newly-Discovery Personnel are relevant as follows:19

18 This group includes the following individuals: Hubie Chou; Paula Kramer; John Muller; Vamsee

Nalamothu; Brian Philips; and Jeffrey Spaulding. See Motion, pp. 18-19. The Plaintiff requested a

search of the Newly-Discovered Personnels files in the April 14 Notice.19 Neither the Motion nor the Reply included excerpts from the Rule 30(b)(6) Deposition of

Defendant eBay. XPRT did not offer additional argument or explanation concerning the Newly-

Discovered Personnel at oral argument. See Transcript, pp. 24-25. Thus, the Plaintiffs relevance

argument is confined to its submissions in support of the Motion.


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documents relevant to the claims, defenses and/or counterclaims asserted in

this litigation.

The Defendants argue that they should not be compelled to search for and/or

produce documents from the Newly-Identified Personnel, because several of the

individuals are former employees. See Opposition, p. 18. The Defendants also

contend that discovery related to the Newly-Identified Personnel will prove

duplicative of the documents that have been or will be produced in the coming

weeks. See id. Finally, with respect to Mr. Muller, the Defendants object to the

requested discovery on the basis of legal privilege. See Opposition, p. 19.

The Defendants may not escape their discovery obligations on account of the

fact that several individuals are no longer in their employ. Federal Rules of Civil

Procedure 26 and 34 require parties to produce all relevant, non-privileged

documents in their possession, custody or control. See FED. R. CIV. P. 26(b),

34(a). XPRTs present request does not run afoul of the discovery rules, as the

Plaintiff has demanded that the Defendants produce all relevant, non-privileged

documents from the files of these six (6) individuals. While an individuals

termination or resignation may raise an issue as to certain forms of discovery, like a

deposition, their files presumably remain in the possession, custody or control of the

Defendants subject to a proper request for production. See FED.R.CIV.P. 34(a).

Again, [t]he probative value of the information requested should be balanced

against the costs and burdens imposed upon the producing party. Inventio AG, 2009


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U.S. Dist. LEXIS 94723, at *11. For each of the Newly-Discovered Personnel,

XPRT did not submit a detailed argument concerning their relevance to the litigation.

While each of the individuals titles suggest that they may possess documents

relevant to the claims, defenses and counterclaims asserted in this litigation, the lack

of detail weakens the relevance connection; this weakness must be considered in

balancing the probative value of the requested discovery against the anticipated

burden. See id.

First, counsel for the Defendants has represented that they will run the

keyword search terms and produce documents relevant to the operation of the

Billpoint system from January 1, 1998 through January 1, 2003. See Transcript, pp.

41-42. At this point, the results of this search are not known. Whether the

anticipated production of documents from this search will address XPRTs relevance

arguments is equally unclear. Mr. Chou and Ms. Kramer were employed by

Defendant eBay during the launch of the Billpoint system and each were purportedly

involved with making changes and modifications to the Billpoint payment

system[.] Motion, Exh. 17. Given XPRTs relevance proffer and the speculative

nature of the Defendants objection on the basis of duplication, the balancing of

interests tips in favor of permitting discovery. Thus, the Defendants shall be

required to search the files of and produce relevant, non-privileged documents

belonging to Mr. Chou and Ms. Kramer.


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Second, the Defendants have produced documents from the files of several

custodians - Cheong, Cutright and Onderonk - related to the checkout programs at

Defendant PayPal. See Transcript, p. 57. Counsel for the Defendants has also

represented that they will run the keyword search terms and produce documents

relevant to Defendant eBays acquisition of Defendant PayPal. See Transcript, p. 42.

Notwithstanding this production, XPRT seeks to include Messrs. Nalamothu,

Phillips and Spaulding as additional custodians, all of whom were affiliated with

Defendant eBays checkout programs. See Motion, Exh. 17. The Plaintiff contends

that each of these individuals will possess documents relevant to long felt but

unresolved need. See id. Given the representations made by counsel for the

Defendants concerning document production and the additional discovery permitted

by this decision and order, the overlap in subject matter and relevance do not

presently allow for the inclusion of Messrs. Nalamothu, Phillips and Spaulding as

additional custodians. The Court denies this aspect of the Motion without prejudice

to allow XPRT to file a limited application concerning Messrs. Nalamothu, Phillips

and Spaulding upon its review of the Defendants production of documents.

Finally, as stated above, the Defendants have represented that they will run

the keyword search terms for documents relevant to Defendant eBays acquisition of

Defendant PayPal. See Transcript at 42. Mr. Muller purportedly served as General

Counsel for Defendant PayPal prior to, during and after the sale. However, the

Defendants have not offered any proof that they have searched the files of or


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produced documents from an individual whose position was similar to that of Mr.

Muller. See Inventio AG, 2009 U.S. Dist. LEXIS 67281, at *6. Thus, the

Defendants objection, with respect to duplication and waste, cannot be sustained.

Likewise, the Defendants assertion of legal privilege is premature where they have

not yet searched Mr. Mullers file for relevant documents. See generally Robert

Bosch LLC, 263 F.R.D. at 145 (finding that the attorney-client privilege requires

proof beyond the mere presence of an attorney). The Defendants shall be required to

search the file of and produce relevant, non-privileged documents belonging to Mr.

Muller. To the extent that Mr. Mullers file contains privileged information, the

Defendants may produce a privilege log.

C. Defendants Request For XPRT To Share In The Discovery Costs

The courts may shift all or part of the costs of producing electronic discovery

to the requesting party. Major Tours, Inc. v. Colorel, 2009 U.S. Dist. LEXIS

97554, at *16 (D. N.J. Oct. 20, 2009) (citing Peskoff v. Faber, 251 F.R.D. 59, 61 (D.

D.C. 2008)). In this jurisdiction, the Honorable Sue L. Robinson, with the assistance

of several federal court practitioners, has issued the default standard for the

discovery of electronically stored information. Ad Hoc Committee for Electronic

Discovery, Default Standard For Discovery Of Electronically Stored Information

(E-Discovery), revised on March 2, 2007,

http://www.ded.uscourts.gov/SLRmain.htm (last visited June 15, 2011) (the Default


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Standard). The Default Standard provides that [g]enerally, the costs of discovery

shall be borne by each party. Id. at 8. However, the court may apportion the costs

of electronic discovery upon a showing of good cause. Id. The Special Master

elects to follow the Default Standard in the absence of binding precedent, and this

decision is supported by the finding that other jurisdictions allow for the shifting of

costs under a comparable standard, albeit somewhat more detailed. See, e.g.,

Zubulake v. UBS Warburg LLC, 217 F.R.D. 309, 322 (S.D.N.Y. 2003) (established a

set of criteria for determining whether to hold the requesting party responsible for

discovery costs).20

The Defendants have not put forth sufficient record support for their request

for an allocation of the costs associated with electronic discovery. The Defendants

have not shown that the requested documents are inaccessible or incapable of being

searched electronically. SeeFED.R.CIV.P. 26(b)(2)(B). While they have produced

hundreds of thousands of pages thus far, the Defendants must have expected this

result in light of the allegations asserted, the number of parties involved and the

nature of their respective businesses. See Transcript at 32-33. Further, the costs

incurred by the Defendants in responding to XPRTs discovery requests are not

20 TheZubulake court provided the following criteria for consideration: (1) the extent to which the

request is tailored to allow for the discovery of relevant information; (2) the availability of the

requested information from other sources; (3) the cost of the document production in comparison to

the amount in controversy; (4) the cost of the document production in comparison to the expense of

other available resources; (5) the ability of each party to control costs; (6) the importance of the issues

in dispute; and (7) the relative benefit of the information sought to the parties. See Zubulake, 217

F.R.D. at 322.


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10-595 (special master op)

Documents