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Samsung Electronics Co., Ltd. v. NVIDIA Corp.

United States District Court, E.D. Virginia, Richmond Division

February 29, 2016

SAMSUNG ELECTRONICS CO., LTD., Plaintiff,
v.
NVIDIA CORPORATION, Defendant

          For Samsung Electronics Co., Ltd., Plaintiff: Alexander Bok-Sing Parker, Darin Walter Snyder, Elysa Qian Wan, Jay Choi, Melody N Drummond Hansen, LEAD ATTORNEYS, George Alfred Riley, PRO HAC VICE, O'Melveny & Myers LLP, San Francisco, CA; Bo Kyoung Moon, Brett Johnston Williamson, LEAD ATTORNEYS, PRO HAC VICE, O'Melveny & Meyers LLP, Newport Beach, CA; Jonathan Patrick Crawford, Susan van Keulen, LEAD ATTORNEYS, PRO HAC VICE, O'Melveny & Myers LLP, Menlo Park, CA; Marc Joseph Pensabene, LEAD ATTORNEY, PRO HAC VICE, O'Melveny & Myers, New York, NY; Mishima Alam, LEAD ATTORNEY, PRO HAC VICE, O'Melveny & Myers LLP (DC-NA), Washington, DC; Robert William McFarland, LEAD ATTORNEY, McGuireWoods LLP, Norfolk, VA; Ryan Ken Yagura, Vision Louis Winter, LEAD ATTORNEYS, Connor Thomas Lynch, PRO HAC VICE, O'Melveny & Myers (CA-NA), Los Angeles, CA; Sean F. Murphy, LEAD ATTORNEY, McGuireWoods LLP, McLean, VA; Xin-Yi Zhou, LEAD ATTORNEY, PRO HAC VICE, O'Melveny & Meyers LLP, Los Angeles, CA; Brian Charles Riopelle, McGuireWoods LLP (Richmond), Richmond, VA; William Rueger Poynter, Kaleo Legal, Virginia Beach, VA.

         For NVIDIA Corporation, Defendant: Ann Marie Wahls, Dale Chang, Sajid Saleem, LEAD ATTORNEYS, Kristopher Ryan Davis, PRO HAC VICE, Latham & Watkins LLP (IL-NA), Chicago, IL Clement Joseph Naples, Saswat Misra, LEAD ATTORNEYS, Michael Avi David, PRO HAC VICE, Latham & Watkins LLP (NY - NA), New York, N.Y. Dabney Jefferson Carr, IV, LEAD ATTORNEY, Troutman Sanders LLP (Richmond), Richmond, VA Ethan Youngjin Park, Eugene Chiu, Lisa Kim Anh Nguyen, Richard G. Frenkel, Ron E. Shulman, Yasamin Parsafar, LEAD ATTORNEYS, Amit Makker, Brett Sandford, PRO HAC VICE, Latham & Watkins LLC (CA-NA), Menlo Park, CA Gabriel Kolin Bell, James Robert Bender, Jessica E. Phillips, Matthew John Moore, Maximilian A. Grant, LEAD ATTORNEYS, Michael Joseph Gerardi, PRO HAC VICE, Latham & Watkins LLP (DC-NA), Washington, DC Julie M. Holloway, LEAD ATTORNEY, Brian William Lewis, PRO HAC VICE, Latham & Watkins LLP (CA-NA), San Francisco, CA Neil Rubin, Philip Xiao Wang, LEAD ATTORNEYS, PRO HAC VICE, Latham & Watkins LLP (CA-NA), Los Angeles, CA Christopher Joseph Forstner, Robert Armistead Angle, Timothy James St. George, Troutman Sanders LLP, Richmond, VA Jonathan Dyste Link, Kilpatrick Townsend and Stockton LLP, Washington, DC.

         MEMORANDUM OPINION

         Robert E. Payne, Senior United States District Judge.

         This matter came before the Court on NVIDIA'S MOTION TO STRIKE THE TESTIMONY AND REVERSE ENGINEERING REPORTS OF DR. JEONGDONG CHOE PURSUANT TO RULE 37(c) (Docket No. 744). Having considered the associated papers and oral arguments, and for the reasons stated below, the Court orally granted the motion in part and denied the motion in part. The Court granted a mistrial as to the 6,287,902 (" '902" ) and 8,252,675 (" '675" ) patents in order to provide sufficient time during which NVIDIA Corporation might engage in curative expert discovery, but denied the motion as it pertained to striking the testimony or reports of Dr. Jeongdong Choe. This Memorandum Opinion followed.

         BACKGROUND

         This patent infringement action was brought by Samsung Electronics Co., Ltd. (" Samsung" ) against NVIDIA Corporation (" NVIDIA" ), alleging infringement of the '902 and '675 patents, as well as the 6,819,602 patent (" '602" ). (Second Am. Compl., Docket No. 81).[1] As to the '675 and '902 patents, Samsung alleged, inter alia, that NVIDIA had infringed by importing, selling, and offering to sell infringing products that were made by an infringing process and under an infringing design. (Second Am. Compl., ¶ ¶ 1323-2135, 2288-2596). More specifically, Samsung alleged that NVIDIA sold, offered for sale and imported the accused products from non-party Taiwan Semiconductor Manufacturing Company (" TSMC" ). Id.

         During discovery, Samsung sought evidence from TSMC regarding the design and the manufacturing of the allegedly infringing products (computers and the chips). (E.g., Pl.'s Opp. to NVIDIA's Mtn. to Strike, Docket No. 755, 17) (" Pl.'s Choe Mem." ). TSMC was non-responsive to entreaties from the parties and the Court. Id. In the absence of evidence from TSMC about the design and the manufacturing process, Samsung elected to have an expert " tear down" the allegedly infringing chips and offer an opinion about the design of the accused chips and how TSMC had made them. Id. Samsung chose Dr. Jeongdong Choe (" Dr. Choe" ), an expert in reverse engineering employed by Techlnsights, Inc. (" Techlnsights" ) to provide an expert report on the design and structure of the allegedly infringing chips and the process that TSMC used to make those chips. Id.

         At the outset of the case, the parties, with the approval of the Court, altered some of the disclosure obligations of Fed.R.Civ.P. 26 through a Stipulated Discovery Order, which provided that " all materials generated by a testifying expert with respect to that person's work are exempt from discovery unless relied upon by the expert in forming any opinions in this litigation." (Docket No. 198, 8-9) (emphasis added).[2] In the run-up to trial, NVIDIA served a Request for Production of documents seeking " documents and things generated by You or other(s) on your behalf ... for litigation or non-litigation purposes, including but not limited to any teardown or reverse engineering reports, electron microscope images, product sample analysis, or product comparison reports." (Docket No. 751, Ex. A). In response to that discovery request and pursuant to the Stipulated Discovery Order, Samsung committed to provide NVIDIA with the reverse engineering documents relied upon by Dr. Choe in connection with his expert report. (Def.'s Mem. in Supp. of Mtn. to Strike the Testimony and Reverse Engineering Reports of Dr. Jeongdong Choe Pursuant to R. 37(c), Docket No. 745, 4-5 (" Def.'s Choe Mem." ); Docket No. 751, Exs. B-E).

         Dr. Choe ultimately produced an expert report that included thirteen (and, following a supplement, fifteen) reverse engineering reports that cited numerous cross-sectional images of the allegedly infringing chips. (Def.'s Choe Mem. 6-8; Docket No. 751, Exs. H-J) . At his deposition, Dr. Choe testified that his expert reports and exhibits were accurate and complete. (Def.'s Choe Mem. 8; Docket No. 751, Ex. K 19:7-11; 41:16-42:11; 46:16-17:14; 47:17-48:22; 289:13-19). Dr. Choe's report served as the foundation upon which both parties built their infringement cases because both parties' infringement experts based their analyses on Dr. Choe's explanation of the design and manufacture of accused chips produced for NVIDIA by TSMC. (E.g., Pl.'s Choe Mem. 16).

         During cross-examination at trial, Dr. Choe testified that, in forming his opinions, he had relied on images that were disclosed neither in his expert reports nor to counsel for either side. (Def.'s Choe Mem. 9-14; see also, e.g., Tr. Jan. 28, 2016 518:1-519:22, 697:14-16; 705:16-21). In particular, Dr. Choe testified that he had reviewed a large number of so-called EDS and EEL images that were not disclosed, and that he had relied on some of those images in reaching the conclusions stated in his expert reports and in his testimony at trial. In essence, Dr. Choe explained that he had used both the disclosed and undisclosed images: (1) to select the most representative images for disclosure in his report; and (2) to confirm that the images that he had reproduced in his reports and testified to at trial were accurate. According to Dr. Choe, the process that he followed is a standard process used both by TechInsights specifically and by practitioners of semi-conductor reverse-engineering generally. Id.

         The Court instructed Samsung to procure the undisclosed images from TechInsights and to provide them to NVIDIA immediately. (Tr. Jan. 29, 2016 744:8-21). Samsung did so. Id. Thereafter, and while trial was progressing on the '602 patent, NVIDIA's expert witness on infringement, Dr. Jack Lee (" Dr. Lee" ), performed a brief preliminary exam of the previously undisclosed images. NVIDIA concluded that some of the previously undisclosed materials upon which Dr. Choe relied demonstrated that silicon was present in the TiN/TatiN layer of the allegedly infringing chips. (Def.'s Choe Mem. 9). The presence of silicon in that layer is an important aspect of NVIDIA's non-infringement defense in this case. Id. The parties agreed upon an accelerated briefing schedule to address how this apparent discovery violation should be handled. (Tr. Jan. 29, 2016 963:17-964:10). This motion and the associated papers followed. Following oral argument, the Court declared a mistrial on the '675 and '902 patents, but proceeded with trial on the '602 patent.

         LAW AND APPLICATION

         NVIDIA's motion for sanctions was filed pursuant to Fed.R.Civ.P. 37(c)(1), which provides that:

If a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless. In addition to or instead of this sanction, the court, on motion and after giving an opportunity to be heard:
(A) may order payment of the reasonable expenses, including attorney's fees, caused by the failure:
(B) may inform the jury of the party's failure; and
(C) may impose other appropriate sanctions, including any of the orders listed in Rule 37(b)(2)(A)(i)-(vi) .

         Fed. R. Civ. P. 37(b)(2)(A)(i)-(vi) provides the following by way of alternate or additional sanctions:

(i) directing that the matters embraced in the order or other designated facts be taken as established for purposes of the action, as the prevailing party claims;
(ii) prohibiting the disobedient party from supporting or opposing designated claims or defenses, or from introducing designated matters in evidence;
(iii) striking pleadings in whole or in part;
(iv) staying further proceedings until the order is obeyed;
(v) dismissing the action or proceeding in whole or in part;
(vi) rendering a default judgment against the disobedient party

         The process of deciding whether to impose sanctions such as those requested by NVIDIA involves three major steps: (1) determining that a violation of a discovery order or one of the Federal Rules of Civil Procedure occurred; (2) determining whether that violation was harmless and substantially justified, by reference to Southern States Rack & Fixture, Inc. v. Sherwin-Williams Co., 318 F.3d 592, 597 (4th Cir. 2003); and (3) fitting a sanction to the violation, if one is found.

         A. Establishing The Existence Of A Violation

         First, a court determines whether a violation of a rule of civil procedure or a court order has occurred. Fed.R.Civ.P. 26 requires that an expert witness's report must include " the facts or data considered by the witness in forming" his opinion. Fed.R.Civ.P. 26(a)(2)(B)(ii) (emphasis added). However, the parties, with the Court's approval, agreed to a Stipulated Discovery Order that provided: " all materials generated by a testifying expert with respect to that person's work are exempt from discovery unless relied upon by the expert in forming any opinions in this litigation." (Docket No. 198, 8-9) (emphasis added). Thus, Samsung's obligation here was to disclose the documents upon which Dr. Choe relied.

         At trial, Dr. Choe's testimony was inconsistent about whether he relied upon the undisclosed scans. (E.g., Def.'s Choe Mem. 9-14, 16-17). On January 28, 2016, in response to questions on cross-examination by NVIDIA's counsel, Dr. Choe clearly stated that he had relied upon material that was not disclosed as part of his report. (Tr. Jan 28, 2016 697:14-16, 702:10-22; Def.'s Choe Mem. 10-13).[3] On January 29, 2016, Dr. Choe stated, with equal clarity, that he had not relied upon any material that was not disclosed as part of his report. (Tr. Jan. 29, 2016 941:2-5; Pl.'s Choe Opp. 5-6). The parties concur that the Court is both the appropriate factfinder and the proper judge of Dr. Choe's credibility on this issue. (Def.'s Choe Mem. 16-18; Pl.'s Choe Opp. 6-7).

         The Court finds that, in keeping with procedures used regularly by Techlnsights and others in the industry, Dr. Choe did rely upon images that were not disclosed with his expert report. The Court notes that, in failing to disclose those documents, Dr. Choe did not act duplicitously or with any awareness that he was not fulfilling Samsung's obligations.[4] It is equally clear that Dr. Choe did not explain to Samsung's counsel that, in following his usual practice, he had not disclosed all the materials upon which he had relied.

         In an attempt to argue that the nondisclosure was still not a violation, Samsung characterizes the undisclosed material as " raw data and back-up files," that, according to Samsung, typically fall outside the reach of Fed.R.Civ.P. 26(a). (Pl.'s Choe Opp. 7). There are two significant problems with Samsung's argument. First, the parties supplanted Rule 26(a) with their own Stipulated Discovery Order that required disclosure of whatever Dr. Choe relied upon to form or support his opinions. Thus, even if the non-disclosed documetns were " raw data and back-up files," they had to be disclosed if Dr. Choe relied on them. Because Dr. Choe relied upon these scans, they were subject to disclosure. Second, the record suggests that the undisclosed information was not just " raw data or back-up files." Much of the omitted materials were the same type of materials - EEL and EDS scans - that were submitted with Dr. Choe's expert report. (Def.'s Choe Mem. 11-18). Dr. Choe's report - following semiconductor industry standard procedures - disclosed only one-tenth of these materials. (Def.'s Choe Br. 17-18). On the record before the Court, the materials disclosed are of the same kind and form (though not the exact content) as the materials that were not disclosed. Thus, it is not possible to characterize them as " raw date or back-up files" which would not be subject to the Stipulated Discovery Order.

         On this basis, the Court finds that, by failing to disclose all of the materials relied upon by its expert, Dr. Choe, Samsung violated the Stipulated Discovery Order. Although the nondisclosure was not known by Samsung or its counsel, it is nonetheless the responsibility of counsel to make clear to their experts the scope of applicable disclosure obligations. Thus, Dr. Choe's nondisclosure and the resulting violation must ultimately be attributed to Samsung.

         B. Substantially Justified And Harmless (Southern States)

         Standing alone, nondisclosure does not require or justify corrective action. A court only takes action if the failure to disclose was not (1) substantially justified and (2) harmless. Fed.R.Civ.P. 37(c)(1); Southern States, 318 F.3d at 595. In the Fourth Circuit,[5] substantial justification and harmlessness are determined by reference to five factors stated in Southern States:

(1) The surprise to the party against whom the evidence would be offered.
(2) The ability of that party to cure the surprise.
(3) The extent to which allowing the evidence would disrupt ...

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