Misc. No. M8–85
United States District Court, S.D. New York
September 25, 2009
Matthew P. Gubiotti, Esq., Cooley Godward Kronish LLP, Palo Alto, CA, for Plaintiff Zenith Electronics LLC.
Thomas P. McLish, Esq., Akin Gump Strauss Hauer & Feld LLP, Washington, DC, for Non–Party Samsung Electronics America.
MEMORANDUM & ORDER
*1 Plaintiff Zenith Electronics LLC (“Zenith”) moves to compel non-party respondent Samsung Electronics America, Inc. (“Samsung America”) to produce technical documents and source code pursuant to a subpoena issued from this District on April 16, 2009 (the “Subpoena”). For the following reasons, Zenith's motion is denied.
In a patent infringement action pending in the Eastern District of Texas, Zenith alleges that Defendant Westinghouse Digital Electronics LLC (“Westinghouse”) sells televisions that “receive, demodulate and decode digital signals broadcast in accordance with the ATSC standard” in a manner that infringes Zenith's patents. (Affidavit of Matthew P. Gubiotti dated Aug. 28, 2009 (“Gubiotti Aff.”) Ex. D: Fourth Amended Complaint.) By disassembling a Westinghouse television, Zenith discovered that a Samsung demodulator chip (the S5H1409) and tuner chip (the DTVS205EH201A) allegedly infringe Zenith's patents. (Gubiotti Aff. 6.) Westinghouse claims it possesses no documents relating to the chips' design, architecture and software code because it purchases fully-assembled televisions. (Gubiotti Aff. 7.)
Zenith served Samsung America with the Subpoena, seeking documents and source code relating to Samsung chipsets that receive “digital television signals terrestrially broadcast in accord with the VSB Technology.” (Gubiotti Aff. Ex. A: Subpoena at 4, 14.) The Subpoena defines Samsung America to include its foreign parent company, Samsung Electronics Corporation (“Samsung Korea”). (Subpoena at 3, 5.)
Samsung America produced no documents in response to the subpoena, asserting it does not design, manufacture or sell the chipsets in question. (Declaration of Thomas P. McLish dated Sept. 8, 2009 (“McLish Decl.”) 6.) Samsung America engages solely in sales and marketing. (McLish Decl. Ex. C: Declaration of Michelangelo Troisi dated Sept. 8, 2009 (“Troisi Decl.”) 5.) It did not develop any source code associated with the chipsets. (Troisi Decl. 5.)
While conceding that Samsung Korea may possess responsive documents, Samsung America argues that it is not obligated to produce them. (McLish Decl. 6.) Samsung Korea maintains separate records and archives—both hard-copy and electronic—to which Samsung America does not have access in the ordinary course of business. (Troisi Decl. 8–9.) Samsung America reports that Samsung Korea is willing to consider production of documents related to one chipset, but only if Zenith withdraws its request for source code, which Samsung Korea considers a highly sensitive trade secret. (Troisi Decl. 11–12.)
In deciding whether a subpoenaed domestic corporation can be compelled to produce documents held by a foreign affiliate, a court must “consider the nature of the relationship between the corporation and its affiliate.” Hunter Douglas, Inc. v. Comfortex Corp., No. Civ. A. M8–85 (WHP), 1999 WL 14007, at *3 (S.D.N.Y. Jan. 11, 1999). If the relationship between the subsidiary and its parent is such that the subsidiary can “obtain documents from its foreign parent to assist itself in litigation, it must produce them for discovery purposes.” Ssangyong Corp. v. Vida Shoes Int'l, Inc., No. 03 Civ. 5014(KMW)(DFE), 2004 WL 1125659, at *4 (S.D.N.Y. May 20, 2004). The critical inquiry is whether the subsidiary can “exercise custody and control over the documents” requested. Hunter Douglas, 1999 WL 14007, at *3.
*2 The test to determine whether a corporation has custody and control over documents located with a foreign affiliate is not limited to whether the corporation has a legal right to those documents. Ssangyong, 2004 WL 1125659, at *3; Dietrich v. Bauer, No. 95 Civ. 7051(RWS), 2000 WL 1171132, at *3 (S.D.N.Y. Aug. 16, 2000). Rather, the inquiry focuses on whether the corporation has access to the documents and ability to obtain the documents. See
In re Ski Train Fire of November 11, 2000 Kaprun Austria, No. MDL 1428(SAS)(THK), 2006 WL 1328259, at *5 (S.D.N.Y. May 16, 2006); Hunter Douglas, 1999 WL 14007, at *3. “Documents may be within the control of a party even if they are located abroad.” In re NTL, Inc. Sec. Litig., 244 F.R.D. 179, 195 (S.D.N.Y.2007). The “party seeking the production bears the burden of establishing control.” Desmeth v. Samsung Am., Inc., No. 92 Civ. 3710(LBS)(RLE), 1998 WL 74297, at *9 (S.D.N.Y. Feb. 20, 1998).
Zenith fails to establish that Samsung America has control over Samsung Korea's documents. That Samsung America may be aware that chips manufactured by Samsung Korea will be used in the United States is insufficient to establish control. See
Dietrich. 2000 WL 1171132, at *3 (subsidiary must have “demonstrated access” to its parent's documents “in the ordinary course of business”). The only other facts Zenith offers to show control is the parent-subsidiary relationship itself and Samsung America's communication of its parent's offer to consider production if the request for source code was withdrawn. That is insufficient. See
Honda Lease Trust v. Middlesex Mut. Assurance Co., No. 3:05 Civ. 1426(RNC), 2008 WL 3285242, at *2 (D.Conn, Aug. 7, 2008) (denying motion to compel where movant failed to produce evidence sufficient to engage in the “fact specific inquiry necessary” to find control).
Here, Samsung Korea refuses to provide documents to its subsidiary voluntarily unless Zenith withdraws its source code request. Compare
Linde v. Arab Bank, et al., No. 04 Civ. 2799(NG)(VVP), 2009 WL 1456573, at *3 (E.D.N.Y. May 22, 2009) (denying motion to compel subsidiary's production of parent's documents where, inter alia,
parent would not provide documents to assist subsidiary in litigation) with
Desmeth, 1998 WL 74297, at *10 (ordering production of parent's documents where the subsidiary already “produced documents that clearly came from [the foreign parent]”). In addition, Samsung America asserts that it does not have access to Samsung Korea's documents in the normal operation of business because it does not design, manufacture, or sell the chipsets, and did not participate in developing the source code. This assertion is not rebutted by Zenith. This Court concludes that Samsung America does not have access to Samsung Korea's separate archives which may be responsive to the Subpoena. Cf.
Hunter Douglas, 1999 WL 14007, at *3 (subsidiary had practical ability to obtain parent's documents where “documents ordinarily flow[ed] freely between them”); Desmeth, 1998 WL 74297, at *9 (court looks for “demonstrated access to documents in the ordinary course of business”).
*3 For the foregoing reasons, Zenith Electronics LLC's motion to compel Samsung Electronics America, Inc. to produce technical documents and source code pursuant to the April 16, 2009 Subpoena is denied.
End of Document.