ENTRUST DATACARD CORPORATION, Plaintiff, v. ZEISER GMBH, FORMERLY KNOWN AS ATLANTIC ZEISER GMBH, ZEISER, INC., FORMERLY KNOWN AS ATLANTIC ZEISER, INC., and INNOVATIME INDUSTRIE SARL, Defendants Case No. 3:17-cv-110-J-39MCR United States District Court, M.D. Florida Filed March 26, 2019 Richardson, Monte C., United States Magistrate Judge ORDER *1 THIS CAUSE is before the Court on Plaintiff’s Motion to Compel Discovery (“Motion to Compel”) (Doc. 139) and Defendants’ Opposition to Plaintiff’s Motion to Compel Discovery (“Response”) (Doc. 154); Defendants’ Motion for a Protective Order (Doc. 189), Plaintiff’s response thereto (Doc. 194), and Defendants’ reply (Doc. 210); Plaintiff’s Motion for Production of Source Code and for a Protective Order Concerning Source Code (“Motion for Production of Source Code and for a Protective Order”) (Doc. 196) and Defendants’ response (Docs. 201 & 212). Upon consideration of the parties’ submissions to the Court, Plaintiff’s Motion to Compel is due to be denied as moot, Defendants’ Motion for a Protective Order is due to be denied, and Plaintiff’s Motion for Production of Source Code and Protective Order is due to be granted in part, and denied in part, for the reasons stated herein. I. Background[1] Plaintiff filed its initial Motion to Compel on June 13, 2018 (Doc. 139), to which the Defendants objected (Doc. 154). The Court held a Discovery Status Conference on October 11, 2018 after the parties reached an impasse with respect to the discovery process, during which the parties clarified that some of the discovery requests in the Motion to Compel were moot. (See Doc. 184 at 8-10.) On November 2, 2018, the Court entered an Order taking the Motion to Compel under advisement, in part, and denying the Motion, in part, as moot. (Doc. 184.) In its November 2, 2018 Order, the Court found that the Motion to Compel failed to comply with the local rules where “Plaintiff’s appendices to its Motion failed to include ‘a statement of the reason [why] the motion should be granted’ immediately after the Defendants’ response[,]” and noted that “even if the Court were to waive Local Rule 3.04(a), Plaintiff nevertheless failed to provide sufficient reasons for granting its Motion.” (Id. at 7.) The Court additionally noted that Plaintiff had “structured its Motion in such a way that” the Court was “unable to determine which of its arguments appl[ied] to which of Defendants’ responses or objections, particularly in light of subsequent productions.” (Id. at 8.) The Court also found that “[i]n addition to the discrepancies in Plaintiff’s Motion, the Defendants’ subsequent supplemental responses also raise[d] questions as to whether some of the requests are still at issue or have been resolved.” (Id.) The Court concluded that the Motion to Compel was due to be denied without prejudice, in part, and taken under advisement in part, pending receipt of the parties’ joint notice regarding the outstanding discovery issues. (Id.) The Court specifically denied the Motion to Compel as moot as to Plaintiff’s “request to compel Defendants to produce the purchase agreement related to the sale of AZ defendants, Plaintiff’s request to compel Defendants to produce quotes and email to potential customers regarding the accused machines, and Plaintiff’s request to compel Defendants to supplement their answer to interrogatories regarding modifications of the accused machines.” (Id. at 15-16.) The Court took the Motion to Compel under advisement in all other respects and ordered the parties to “to meet and confer” in order to reach an agreement regarding “the scope of source code to be produced by the Defendants.” (Id. at 16.) The Court also directed the parties to file a joint notice with the Court “as to any unresolved discovery issues in connection with Plaintiff’s Motion to Compel.” (Id.) *2 On November 12, 2018, the parties filed their Joint Notice Pursuant to [the] Order Entered November 2, 2018 (Doc. 186), informing the Court that the parties had met and conferred, but had been unable to reach an agreement regarding the production of source code, the entry of a protective order, and other discovery issues. The parties also indicated they intended to meet again and gave notice that they would file a joint notice on November 19, 2018, would report “any agreements, including any hard dates for production, and [would] identify any unresolved issues that further require resolution from the Court.” (Doc. 186 at 2). However, the parties failed in their efforts to resolve the issues without Court intervention, and subsequently filed separate notices with the Court regarding their outstanding discovery disputes. (See Docs. 190 & 191.) On November 15, 2018, Defendant filed its Motion for a Protective Order (Doc. 189) in anticipation of the potential production of source code. On November 30, 2018, Plaintiff filed its Motion for Production of Source Code and for a Protective Order Concerning Source Code (Doc. 196). To the extent Plaintiff’s Motion to Compel was taken under advisement on a limited basis, and in light of Plaintiff’s renewed request for the production source code, the Court now finds that the Motion to Compel is due to be denied as moot. Plaintiff’s Motion for Production of Source Code and Protective Order and Defendants’ Motion for a Protective Order are addressed below. II. Standard It is clear that the parties may obtain discovery: regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Information within this scope of discovery need not be admissible in evidence to be discoverable. Fed. R. Civ. P. 26(b)(1). The rules “strongly favor full discovery whenever possible.” Farnsworth v. Procter & Gamble Co., 758 F.2d 1543, 1547 (11th Cir. 1985). “The discovery process is designed to fully inform the parties of the relevant facts involved in their case.” United States v. Pepper’s Steel & Alloys, Inc., 132 F.R.D. 695, 698 (S.D. Fla. 1990) (citing Hickman v. Taylor, 329 U.S. 495, 501 (1947)). “The overall purpose of discovery under the Federal Rules is to require the disclosure of all relevant information so that the ultimate resolution of disputed issues in any civil action may be based on a full and accurate understanding of the true facts, and therefore embody a fair and just result.” Oliver v. City of Orlando, No. 6:06-cv-1671-Orl-31DAB, 2007 WL 3232227, at *1 (M.D. Fla. Oct. 31, 2007) (citing United States v. Procter & Gamble Co., 356 U.S. 677, 682 (1958)). Discovery is intended to operate with minimal judicial supervision unless a dispute arises and one of the parties files a motion requiring judicial intervention. Furthermore, “[d]iscovery in this district should be practiced with a spirit of cooperation and civility.” Middle District Discovery (2015) at 3. Motions to compel discovery under Rule 37(a), Fed.R.Civ.P., are committed to the sound discretion of the trial court. See Commercial Union Ins. Co. v. Westrope, 730 F.2d 729, 731 (11th Cir. 1984). The trial court’s exercise of discretion regarding discovery orders will be sustained absent a finding of abuse of that discretion to the prejudice of a party. See Westrope, 730 F.2d at 731. The party bringing a motion to compel discovery “bears the burden of demonstrating that the information it seeks is relevant.” Costa v. Metro. Life. Ins. Co., No. 6:17-CV-714-ORL-40TBS, 2018 WL 1635642, at *2 (M.D. Fla. Apr. 5, 2018). For the Court to be able to rule on a motion to compel, it must “be specifically targeted to specific requests and must have reasons why the motion should be granted.” Newman v. Sun Capital, Inc., No. 2:09-cv-445-FtM-29SPC, 2010 WL 11470980, at *1 (M.D. Fla. Jan. 15, 2010). “In order for the production of source code to be compelled, Plaintiff must prove that it is relevant and necessary to the action.” Congoo, LLC v. Revcontent LLC, No. CV 16-401 (MAS), 2017 WL 3584205, at *3 (D.N.J. Aug. 10, 2017). In patent infringement cases, source code may be relevant to the prosecution or defense of a case. See MVS Studio Inc. v. Bingo Bean, LLC, No. CV 10-07675 JHN SSX, 2011 WL 10538669, at *2 (C.D. Cal. June 24, 2011) (“Plaintiffs are entitled to access information that is relevant to proving or disproving their allegations....This generally includes the disclosure of raw data (source code, schematics, formulas, etc.) sufficient to show the operation of the accused aspects of the products in order to allow the patentee to make it’s [sic] own determinations as to infringement.”) (internal citations and quotations omitted); see also Drone Techs, Inc. v. Parrot S.A., 838 F.3d 1283, 1294-1301 (Fed. Cir. 2016). Even if the requested source code is relevant and necessary, if alternatives to disclosure are available then “a court will not be justified in ordering disclosure.” Congoo, 2017 WL 3584205, at *3; see also Drone Techs, 838 F.3d at 1300 (vacating the district court’s orders compelling the alleged infringer to produce all source code where the court abused its discretion by failing to “explain why ‘all’ source code or even any source code was needed or relevant in [the] case” and stating that “source code is not necessary in every case”). Additionally, “it is well recognized among the lower courts that source code requires additional protections to prevent improper disclosure because it is often a company’s most sensitive and most valuable property.” See Drone Techs, 838 F.3d at 1300 n.13. III. Discussion A. Production of Source Code *3 Plaintiff contends that it has narrowed its request and now seeks source code for three main sets of software of the accused machines, including: “(1) the machine control; (2) the firmware for the ICC [Integrated Circuit Card] Programming module and the reject station downstream of the module, and for each module upstream of the ICC programming module (the magnetic stripe encoding module, and the input hopper module); and (3) for all software that is loaded or runs on what Defendants call their Personalization Management Platform[2] (“PMP”).” (Doc. 196 at 2.) Plaintiff also seeks to obtain Defendants’ “ancillary files used or called by the aforementioned three sets of software and firmware” including “Dynamic Link Library (.dll) files, configuration files, initialization files, set-up files.” (Id.) Plaintiff also seeks the production of “the Software Development Kit (“SDK”) for each set of software, whether in the form of digital programs, or written instructions” offered by Defendants to users.[3] (Id.) Plaintiff argues that the requested source code and software are “directly relevant to infringement of claims 4-6 and 8” of Plaintiff’s ‘205 patent.[4] (Id. at 2-3.) According to Plaintiff, claim 4 of ‘205 Patent “is of most consequence”[5] since it “contains a limitation for a ‘pass-through location through which a card is able to pass through without programming.’ ”[6] (Id. at 3, 7 (emphasis in the original)). Thus, Plaintiff argues that “whether the claims are infringed depends not just on the movement of the cards through the ICC module, but on whether the machine, the ICC programming module, and the programming software in the system attempt to contact and program the card.” (Id. at 4.) Plaintiff asserts that the source code produced by Defendants to date fails to include “any information about whether programming of the IC chip on a card is, or is not, being conducted—which is the express condition stated in claim 4 of the ‘205 Patent.” (Id. (emphasis in the original).). Plaintiff also contends that a form of “pass-through” processing under claim 4 of the ‘205 Patent arises where: [A] card is moved first through the magnetic stripe encoding module, which is upstream of the ICC module. The mag stripe module has a head that encodes information onto the mag stripe of the card, and then quickly reads the mag stripe and determines that if the coding is correct. If it is correct[,] the card is passed to the ICC module to be programmed. If it is not correct[,] the card is flagged as bad and the ICC module is instructed not to program the card[;] in other words, the card will be passed though the ICC module without programming. *4 (Id. at 13 (internal citations omitted).) Thus, Plaintiff argues that a pass-through process requires coordination between the three sets of software and the code reviewers will need access to the three sets of software where “the firmware in the mag stripe module is responsible for processing the card through the mag stripe module and determining if it is good or not, the machine control software then determines if the card should be programmed or passed through the ICC module without programming and communicates that to the ICC module and the PMP software.” (Id.) Thus, according to Plaintiff, in order to determine whether Defendants’ accused machines infringed or continue to infringe on the ‘205 patent with respect to the pass-through limitation, its experts will need to evaluate the three sets of software as they work together. Furthermore, Plaintiff describes the accused PERSOMASTER machine as having three distinct segments[7] and claims that it has narrowed its request for source code by excluding “the firmware for the modules in the second, Continuous segment, and the last, Stop & Go segment that contains the output hopper.” (Id. at 14.) However, with respect to the machine control software, Plaintiff argues that it needs access to the machine control code for the entire machine because if there is an error with a card in the mag stripe module, for example, resulting in that card being rejected, then “the machine control software must re-sequence all operations including those of modules on the Continuous part of the line.” (Id. at 14.) Plaintiff also requests that Defendants produce the source code repository as well as the relevant code from 2014 to the present. (Id. at 15.) Plaintiff argues that while Defendants claim to have made modifications to the accused machines to cure any alleged infringement contentions, the repository version of the code “will reflect the changes made to software over the lifetime of the project; the date of changes; and identify who made the change.” (Id. at 15.) Plaintiff also argues that the repository code from 2014, when Defendants allegedly first developed and offered the accused machine for sale, through the present “is relevant to determine what changes have been made and when, as well as when infringement began and whether it continues.” (Id. at 16.) Defendants, on the other hand, argue that the production of source code is unnecessary to resolve the asserted claims against the accused machines, because according to Defendants, the claims are “directed to IC programming modules having specific mechanical requirements.” (Doc. 212 at 3.) Defendants also argue that Plaintiff’s renewed request for source code is unnecessary, disproportionate to the needs of the case, harassing and prejudicial, and made for the purpose of delay. (Id. at 3-4.) Defendants argue that Plaintiff’s request remains overly broad where “the ‘205 Patent relates to structural components of an IC programming module, including a ‘pass-through location’ that permits an IC card to ‘pass-through’ the IC module without being programmed.” (Id. at 7.) Thus, Defendants argue, the functionality of unrelated modules, “such as the input hopper, magnetic stripe encoding module, printers, card flippers, and the like,” or the way they communicate with other modules, “is not relevant to the allegations in this case.” (Id.) Defendants also contend that Plaintiff’s arguments for the production of source code are premised on uncontested issues. (Doc. 212 at 8-10.) Defendant concedes that when the IC programing functionality is off, “cards lacking an IC chip would not be programmed by the IC programming module.” (Doc. 212 at 8.) Similarly, Defendants concede that “an IC card flagged as having a faulty or bad magnetic stripe travels through the IC programming module without programming.” (Id. at 9.) Additionally, with respect to claim 8 of the ‘205 patent, Defendants also concede that the original accused machine loaded cards non-consecutively, but that all of the accused machines were modified to load cards consecutively. (Id. at 12.) Defendants also argue that the plain and ordinary meaning of the “pass-through location” of claims 4-6 does not encompass “how the IC module ‘actually conducts programming.’ ” (Id. at 12.) *5 Notwithstanding Defendants’ arguments to the contrary, Plaintiff has shown good cause for its requested relief, except: (1) the production of machine control software should be limited to the first and second segments of the accused machines, and (2) only the relevant and narrowed repository source code, from 2014 to the present, for the accused machines delivered to and used in the United States should be produced.[8] Plaintiff has established that the requested source code is relevant to the claims and defenses regarding infringement and necessary to Plaintiff’s theories of Defendants’ past and/or continued infringement. Further, as noted by Plaintiff, the undersigned finds that Defendants’ admissions, including admissions as to the modifications of the accused machines, are insufficient to militate against the production of source code.[9] To the extent Defendants argue that the bases for Plaintiff’s request for the source code are flawed because they are based on allegedly undisputed issues, Defendants’ arguments represent competing theories of the case and are not sufficient to overcome Plaintiff’s showing of relevance and necessity based on its theory of the case.[10] B. Protective Order Plaintiff also argues that its proposed protective order should be adopted in connection with the production of source code and that the source code should be produced to its expert, Stroz Friedberg, in Boston, Massachusetts.[11] (Doc. 196 at 21-24.) Before Plaintiff filed its Motion for Production of Source Code and for a Protective Order, Defendants also filed their Motion for a Protective Order in anticipation of potentially having to produce source code, given that the parties had again reached an impasse regarding discovery.[12] (Doc. 189.) The main distinction between Plaintiff’s and Defendants’ proposed protective orders relate to the manner of production. Plaintiff requests that the source code be produced to its experts in Boston, Massachusetts, while Defendants request that the source code be produced to, and reviewed at, Defendants’ counsel’s office in St. Louis, Missouri. (Doc. 196 at 23.) Specifically, Defendants argue that to the extent they are ordered to produce source code, they should not have to produce native source code directly to a third-party expert. (Doc. 212 at 4.) On the other hand, Plaintiff argues that Defendants’ proposal fails to comply with Fed.R.Civ.P. 1, providing “for the most just, speedy, efficient, and cost-effective review of the source code by [Plaintiff’s] experts ....” (Doc. 194 at 2.) According to Plaintiff, Defendants’ proposed protective order (requiring production at Defendants’ counsel’s office in St. Louis, Missouri), would “multiply the overall cost of the source code review without providing any corresponding benefit by requiring EDC’s experts to travel to opposing counsel’s law office for an extended period of review.” (Id.) *6 On the other hand, Defendants argue that Plaintiff’s request that the source code be delivered to Plaintiff’s expert in Boston “creates a high risk of inadvertent disclosure of the proprietary information and is not proportional to the needs of the case.” (Doc. 212 at 19.) Defendants specifically raise concerns about Plaintiff’s industry expert, David R. Tushie, having “unfettered access to review the source code and [the potential to] attempt to determine how Defendants have achieved superior card programming.” (Doc. 212 at 16.) Defendants argue that allowing Plaintiff to access irrelevant source code of “great commercial value that could be easily lost to a third party would be highly prejudicial ....” (Id.) Defendants propose that, if they must produce source code, then the Court should adopt their proposed Protective Order requiring the source code to be produced at Defendants’ counsel’s office. (Id. at 19-20 (“Alternatively, housing the source code in text searchable format on a stand-alone computer at outside counsel’s office allows for more restrictive control over how the code is handled and reviewed.... If Plaintiff truly wishes to review this massive amount of code—and if the Court orders such production—then Plaintiff should be required to review it in a way that protects the confidential nature of the code and limits any potential inadvertent disclosure.”).) It is undisputed that there is good cause for entry of a protective order governing the production of Defendants’ source code. See Doc. 196 at 20; see also Fed.R.Civ.P. 26(c)(1)(G) (“requiring that a trade secret or other confidential research, development, or commercial information not be revealed or be revealed only in a specified way”); In re Alexander Grant & Co. Litig., 820 F.2d 352, 358 (11th Cir. 1987) (per curiam); Drone Techs, 838 F.3d at 1300 n.13. To the extent the parties have filed competing protective orders, the Court finds that Plaintiff’s proposed protective order provides sufficient protections to Defendants’ source code. Although the Court acknowledges Defendants concerns regarding Plaintiff’s expert’s access to the source code and their concern that Mr. Tushie could obtain competitive information regarding the accused machines, the Plaintiff’s proposed Protective Order provides sufficient protections against prohibited uses of the source code, including “competitive purposes or the prosecution of additional intellectual property rights.” (See Doc. 196-3 at 2, 7.) Furthermore, in light of Plaintiff’s expert’s declarations regarding the heightened security protections to be afforded at their location in connection with the review of the source code, the estimated additional expense and time associated with conducting the review at Defendants’ counsel’s office, estimated to be an additional $40,000 - $60,000, is not warranted when the source code can be reviewed more efficiently and securely at Plaintiff’s expert’s location. (See Doc. 196 at 22; see also 195 ¶ 9 (“In sum, in my experience, off-site source code review and analysis is generally far more costly, burdensome, and less effective than review at our facilities, and no more secure.”).) IV. Conclusion Plaintiff has demonstrated that the source code it seeks is relevant and necessary to its claims of infringement. Thus, Defendants shall produce the requested source code in native format, with the exceptions noted above, to Plaintiff’s expert in Boston, Massachusetts. Furthermore, Plaintiff’s proposed Protective Order is approved. Accordingly, it is ORDERED: 1. Plaintiff’s Motion to Compel (Doc. 139) is DENIED as moot. 2. Defendants’ Motion for a Protective Order (Doc. 189) is DENIED. 3. Plaintiff’s Motion for Production of Source Code and for a Protective Order (Doc. 196) is GRANTED in part, and DENIED in part. a. Plaintiff’s Proposed Protective Order for Source Code (Doc. 196-3) attached to the Motion, is approved. b. Within ten (10) days of this Order, Defendants shall produce the following to Plaintiff: i. Relevant source code for the machine control software for the Persomaster and INNO60000 machines from January 1, 2014 to the present, not to include the machine control software for the third segment of the accused machines. ii. All firmware and all versions of all firmware for the input hopper module, magnetic stripe encoding module, Integrated Circuit Card programming module, and the reject module, for the PERSOMASTER and INNO6000 machines, for the period from January 1, 2014 to the present, including all source code for all such firmware. *7 iii. All source code, and all versions of source code for the Personalization Management Platform used with the PERSONMASTER and/or INNO6000 machines, for the period from January 1, 2014 to the present. iv. All ancillary files, such as configuration files, initialization files, set-up files, Dynamic Link Library files (.dll’s), and logging files, which are used by, in connection with, or called by any of the software or firmware in (b)(i) above. v. All Software Development Kits (“SDKs”) and all versions of SDKs for any of the software or firmware in (b)(i)-(iv) above. c. All of the foregoing shall be produced in native format, with all source code repository information and software for the same. d. Production shall be made by providing all of the foregoing to Plaintiff’s experts on a hard drive or other suitable storage device at the following address, in accordance with the Protective Order for Source Code entered with this Order: c/o Christopher Rucinski, Stroz Friedberg, 2 Oliver St., 11th Floor, Boston, MA 02109. DONE and ORDERED in Jacksonville, Florida on March 26, 2019. Footnotes [1] The parties are familiar with the facts in this case; therefore, they are not restated here in length. [2] Plaintiff states that it is requesting production of “the PMP software that runs an encryption algorithm on a chip to ‘unlock’ and access it, directly controls the programming of the chip, and then ‘locks’ the chip again.” (Doc. 196 at 6). [3] According to Plaintiff, the SDKs “allow the user of the equipment to change the machine’s programing or ancillary files, [and] to customize how the machine operates.” (Doc. 196 at 6.) [4] Although Plaintiff asserts infringement allegations against Defendants relating to its ‘925 Patent, Plaintiff claims that the requested source code is “most pertinent to the ‘205 patent.” (Doc. 196 at 7.) [5] Plaintiff argues that the source code is also relevant to the infringement of claims 5, 6 and 8 of the ‘205 patent. (Doc. 196 at 17.) Dependent claim 5 “provides that said pass-through location comprises of said card programming stations and dependent claim 6 provides that said pass through comprises a pass-through slot. Independent claim 8 claims a method of programming an integrated circuit card that comprises moving the integrated circuit card programming stations relative to the card path while non-consecutively loading integrated circuit cards into the programming station for subsequent programming.” (Id.) [6] Plaintiff also claims that the Court “declined to read specific physical characteristics into the ‘pass-through location’ element, and adopted the plain and ordinary meaning of the claim term.” (Doc. 196 at 4.) [7] Plaintiff describes the three segments as follows: (1) the upstream segment described as “Stop & Go” consisting of the input hopper, the mag stripe encoding module, the ICC Programming module, and a reject module; (2) the “Continuous” segment; and (3) “another “Stop & Go” segment where the cards are stacked into an output hopper.” (Doc. 196 at 14.) [8] As recognized by Defendants, “since the IC modules of the accused machines were developed in France ... [h]istorical versions of the source code thus would not be pertinent to a determination of infringement of a United States patent. Rather, only the source code that was included with the machines delivered to and used in the United States would potentially be relevant.” (Doc. 212 at 7.) [9] For example, even though Defendants argue that “the purportedly-modified PERSOMASTER and/or INNO6000 machines do not infringe, the repository versions of the three categories of source code should reflect the changes, and whether they were permanent or the software was reverted back to an infringing form at a later date, and if so, by whom.” (Doc. 196 at 15.) [10] Plaintiff claims that the “evidence will be that despite any changes to the machine, the ‘pass-through location’ limitation of Claim 4 continues to be infringed.” (Doc. 196 at 15.) [11] According to the parties, the source code is in France and would have to be shipped to the United States. (Doc. 196 at 21.) [12] Defendants contend that the Court should adopt Defendants’ proposed protective order, modeled after the protective order stipulated to by Plaintiff’s counsel in in Aatrix Software, Inc. v. Green Shades Software, Inc., Case No. 3:15-cv-164-HES-MCR (M.D. Fla.), where the source code was produced at Defendants’ counsel’s office in Jacksonville, FL. (See Docs. 189 & 189-1 at 4.) However, as Plaintiff in the instant case explained, in the Aatrix case, the source code was produced at the Defendant’s counsel’s office in Jacksonville, Florida because that is where the Defendant’s headquarters and the source code were located. (See Doc 196 at 23.) Furthermore, the Court notes that in the Case Management and Scheduling Order in the Aatrix case (Doc. 99), the Defendant was originally directed to “produce all source code at the offices of Plaintiff’s expert, Stroz Freidberg ....”