Ford Motor Co. v. Versata Software, Inc.
Ford Motor Co. v. Versata Software, Inc.
2017 WL 11632535 (E.D. Mich. 2017)
August 14, 2017
Graham, Lawrence D., Special Master
Summary
The court denied Versata's motion to compel Ford to produce source code related to PDOR2, as Versata had not established relevance of the source code in a focused, particularized manner. The court also found that Versata had not complied with Local Rule 7.1 in its request for technical documentation related to PDOR2, and therefore recommended that Versata's motion should be denied.
Additional Decisions
FORD MOTOR COMPANY, Plaintiff,
v.
VERSATA SOFTWARE, INC., et al. Defendants
v.
VERSATA SOFTWARE, INC., et al. Defendants
Case No. 15-cv-10628-MFL-EAS, (consolidated with Case No. 15-11624)
United States District Court, E.D. Michigan, Southern Division
Signed
August 14, 2017
Filed August 14, 2017
Counsel
Frank A. Angileri, John S. LeRoy, Amy C. Leshan, Chanille Carswell, Christopher C. Smith, Thomas A. Lewry, John P. Rondini, Jonathan D. Nikkila, Brooks Kushman P.C., Southfield, MI, Alan J. Gocha, Foley & Lardner LLP, Detroit, MI, James P. Feeney, Dykema Gossett, Bloomfield Hills, MI, for Plaintiff.Matthew Thomas Caldwell, Amir H. Alavi, Demetrios Anaipakos, Jane Langdell Robinson, Justin Y. Chen, Masood Anjom, Michael D. McBride, Scott W. Clark, Kyung Kim, Kyril V. Talanov, Ahmed, Zavitsanos, Anaipakos, Alavi & Mensing P.C., Houston, TX, Dan K. Webb, Matthew R. Carter, Winston and Strawn LLP, Chicago, IL, Jaye Quadrozzi, Rodger D. Young, Young & Associates, Farmington Hills, MI, Lanny Jesse Davis, Lanny J. Davis and Associates, Washington, DC, Sharoon Saleem, Jones Spross, PLLC, Austin, TX, Steven John Mitby, Seiler Mitby, PLLC, The Woodlands, TX, for Defendant Versata Software, Inc.
Matthew Thomas Caldwell, Amir H. Alavi, Demetrios Anaipakos, Jane Langdell Robinson, Justin Y. Chen, Masood Anjom, Michael D. McBride, Scott W. Clark, Kyung Kim, Kyril V. Talanov, Ahmed, Zavitsanos, Anaipakos, Alavi & Mensing P.C., Houston, TX, Dan K. Webb, Matthew R. Carter, Winston and Strawn LLP, Chicago, IL, Jaye Quadrozzi, Rodger D. Young, Young & Associates, Farmington Hills, MI, Lanny Jesse Davis, Lanny J. Davis and Associates, Washington, DC, Steven John Mitby, Seiler Mitby, PLLC, The Woodlands, TX, for Defendants Trilogy, Inc., Versata Development Group, Inc.
Manisha Tambe, Pro Se.
Manoj Tambe, Pro Se.
Graham, Lawrence D., Special Master
REPORT AND RECOMMENDATION OF THE SPECIAL MASTER TO DENY VERSATA'S MOTION TO COMPEL PDOR2 SOURCE CODE
*1 This is a Report and Recommendation in a discovery dispute in the above-captioned matter, addressing the motion of Versata Software, Inc. (“Versata”) to compel Ford Motor Company (“Ford”) to produce source code related to PDOR2. Pursuant to the Court's Order Appointing Special Master for Resolving Discovery Disputes (Dkt. #230), I issued a Preliminary Ruling on June 26, 2017. On June 28, 2017, Versata provided a written objection requesting the submission of this Report and Recommendation. See Exhibit 1. In this Report and Recommendation, I recommend that Versata's motion be denied.
Background
In 2014, Ford launched a rule-authoring computer application that it calls PDO. Ford developed PDO as a replacement for an earlier rule-authoring application called ACM, which Ford alleges was developed jointly between the parties, and which Ford licensed from Versata. In this action, Versata alleges that Ford's PDO software infringes certain patents and incorporates trade secrets misappropriated from Versata. Ford denies these allegations and seeks a declaratory judgment that there has been no infringement or trade secret misappropriation. Ford has also developed additional computer applications which are collectively called PDOR2. Versata contends that PDOR2 is an updated version or enhancement of PDO, and seeks an order compelling Ford to produce all PDOR2 source code. Ford contends that PDOR2 comprises a suite of separate applications, not an updated or new version of PDO, and that PDOR2 is irrelevant and should not be produced.
In earlier discovery motions, Versata sought documents and source code for multiple computer programs, and to some extent Versata's earlier requests have related to PDO and PDOR2. The prior motions serve as a backdrop for the current motion, and therefore a background summary is provided below.
On January 27, 2017, Versata submitted a motion asking that Ford be compelled to produce all source code files related to PDO, including recent versions of the PDO code that were created after the September 2015 version that has been made available to Versata in discovery. The focus at that time was on updates to PDO, without reference to PDOR2. After Ford responded and a teleconference with the parties was held, on February 14, 2017, my Preliminary Ruling stated:
Versata also seeks access to versions of the PDO code that post-date the last version that Ford produced in discovery, dated September 2015. Ford confirms that it will not assert in this action that there have been any changes in the more recent versions of PDO code that have any bearing on liability in this action, and that if the September 2015 version infringes any rights held by Versata then the more recent versions do as well. Versata posits that perhaps newer versions have tried to design around certain rights of Versata, or have actually copied additional Versata intellectual property, but does not identify anything establishing that the production of a more current version is reasonably calculated to lead to the discovery of such facts. In a case involving source code that is currently being used and updated, there will be continual updates that differ from a version produced earlier in discovery. At some point, the case must proceed based on a prior version even though it has been replaced or modified in some way in a more current version. Unless Versata can articulate a specific reason that a newer version is sufficiently relevant to justify the burden of further production, such as with the assertion of facts to support its speculation above, the case should proceed based on the version already produced. Ford should not need to produce a more current version of the PDO software. Versata may renew this request in the event it uncovers facts indicating that a more recent version of PDO has been modified in a relevant way.
*2 Neither party objected to this Preliminary Ruling, and therefore a Report and Recommendation was not filed.
On February 28, 2017, Versata submitted another motion seeking access to additional source code, specifically requesting source code for computer applications called PDOR2, GPD, and GPDS. Following a telephonic conference on March 17, 2017, on that same date my Preliminary Ruling stated:
Versata also states that it has become aware of other code repositories, including PDOR2 and GPD. Given the similarity in name between PDOR1 (which forms the basis of the present dispute, though referred to by the name PDO) and PDOR2, Versata contends that access to PDOR2 is relevant. Versata also points to certain early documents suggesting that PDOR2 would include a rule authoring function, and that it is therefore relevant. Ford responds that such documents are inaccurate, or perhaps described initial proposals for inclusion but which were not ultimately included. Ford also asserts that allowing access to the source code in these repositories would impose a significant burden. Ford proposes to produce applicable manuals from PDOR2 and GPD to allow Versata to determine whether any further or revised infringement contentions should be made which would make these applications relevant. Ford shall do so by March 28, 2017. Thereafter, Versata may renew its request for access if a further investigation determines that code in these repositories is at issue in this action.
Essentially, the above Preliminary Ruling adopted an agreed position of the parties during the teleconference. Neither party objected to this Preliminary Ruling, and therefore a Report and Recommendation was not filed.
On May 19, 2017, Versata submitted another motion directed specifically to PDOR2 and asking for “all manuals and technical documents (including use cases, design documents, and testing documents) related to PDOR2 and to provide Versata with access to the PDOR2 source code.” This Versata letter is the Opening Letter leading to the present Report and Recommendation, and is attached as Exhibit 2. In the Opening Letter, Versata stated that after conferring with Ford it had received some technical documents but had not received PDOR2 manuals, and further asked for PDOR2 source code.
Ford responded on June 1, 2017 in a Response Letter attached as Exhibit 3. In the Response Letter, Ford stated that PDOR2 was not an updated version of PDO, but rather a suite of applications that provide different functionality. Ford stated that its Rule 30(b)(6) witness Mr. Michael Sullivan testified to this effect at his deposition. Ford also objected to the request for manuals and technical documents, stating that the parties had met and conferred regarding source code but not with respect to anything more.
On June 9, 2017, a telephonic conference addressed the discovery issues initiated by Versata's May 19 Opening Letter. On June 12, 2017, I submitted a Preliminary Ruling which stated, in part:
At this stage, Versata has not accused PDOR2 of infringement and has not otherwise established that it is at issue. Given the burden associated with making the source code available for review, the requested access is not proportional to the needs of the case. Versata may still renew its request for access to the source code, but as a prerequisite Versata should first take action to place it squarely at issue, such as (for example, and without limitation) by submitting a revised infringement contention expressly accusing PDOR2, based on PDOR2 materials such as the manuals. Versata's request for access to PDOR2 source code is therefore denied.
*3 On June 13, 2017, Versata objected to the Preliminary Ruling of June 12, 2017. The Order Appointing Special Master for Resolving Discovery Disputes (Dkt. #230, at p.3, ¶6) provides that “Upon receiving a Preliminary Objection, Mr. Graham will prepare and file with the Court a Rule 53 Report and Recommendation concerning the discovery dispute. The Report and Recommendation will attach as exhibits the Opening Letter and the Response Letter. Alternatively, or in addition, Mr. Graham may hold another teleconference in an attempt to resolve the discovery dispute.”
I concluded that the present issue could benefit from a further teleconference, and that additional submissions from the parties could also facilitate resolution of the issue. On June 15, 2017, I requested that the parties supplement their prior briefing to address three key points, inviting another teleconference addressing the motion after the submission of supplemental briefing. Specifically, I requested:
First, the parties disagree greatly about the amount of effort that would be required to enable Versata's access to PDOR2 source code. Ford states that it would consume more than the six weeks of work that were required to make PDO available, requiring creation of backups, copies to new infrastructure, new installations and configurations, and testing. Versata states that this is not so, and that it likely involves little more than changing permissions. Considering that proportionality is a significant factor in the evaluation of the present motion, and given the difference in positions, more than attorney assertion is required to bridge the gap. Each side should submit a supplement, to the extent reasonably possible, supporting and corroborating the assertions of counsel related to the burden or ease with which PDOR2 can be made available for inspection.
Second, the parties dispute whether PDOR2 is a new version of PDO or an entirely separate set of complementary applications. Versata points to some excerpts from eNews bulletins that could be interpreted either way. Ford produced several manuals for what it says are the new applications that form PDOR2, but Versata states that they do not mention PDOR2 on them anywhere. Ford points to a deposition excerpt from its Rule 30(b)(6) designee Mr. Sullivan to the effect that PDOR2 is not a different version of PDO, but rather a set of separate applications. Other than the terse testimony from Mr. Sullivan, the evidence on both sides is somewhat circumstantial. Ford should produce something which more definitively defines the content of PDOR2 with particularity. Most preferably, this would be in the form of internal documentation which summarizes the entire functionality of PDOR2 in a way that allows Versata to understand it. Alternatively, or in addition, a declaration from someone with knowledge to the same effect may be submitted. Ford's submission should comprehensively address the entirety of PDOR2. In addition, Versata should state whether it requests source code for the suite of applications addressed with particularity in Ford's response of June 1, 2017, and if so then Versata should articulate how those applications are accused and at issue such that the source code would be relevant and discoverable.
Third, if Versata contends that anything beyond PDOR2 source code is presently at issue (that is, such as other documents and things), Versata should articulate the request, provide the basis for the request, and demonstrate that the parties met and conferred regarding such additional demands in advance of the motion.
*4 Each side should submit the above materials by the end of the day Tuesday, June 20, and I propose a telephonic conference thereafter at 11:00 a.m. PDT on Thursday, June 22. Either party may, if it wishes, rebut the supplementation of the other side in advance of the hearing as quickly as possible, but not later than the end of the day June 21.
Without objection, the parties submitted initial supplemental briefing in response to the above request. Each side submitted an initial supplement on June 20, 2017. Versata's Supplemental Opening Letter is attached as Exhibit 4; Ford's Supplemental Response Letter is attached as Exhibit 5. Versata also submitted a reply on June 21, but Ford did not. Versata's Supplemental Reply Letter is attached as Exhibit 6.
On June 22, a further teleconference was held regarding PDOR2 source code. John LeRoy and Jonathan Nikkila appeared on behalf of Ford; Steve Mitby, Jaye Quadrozzi, Ifti Ahmed, and Jane Robinson appeared on behalf of Versata. Having considered the above submissions and arguments, I make the following recommendation to deny Versata's motion.
The Content of PDOR2
An initial question is whether PDOR2 is a revised or upgraded version of PDO, as Versata contends, or whether it is a suite of separate applications, as Ford contends. If PDOR2 is an upgraded or revised version of PDO, then it is clearly relevant but the production of the upgraded version would be subject to the February 14, 2017 Preliminary Ruling addressing Versata's request for such upgraded versions and concluding that upgraded versions need not be produced. Versata did not object to that Preliminary Ruling.
If PDOR2 is not an upgraded version, but rather is a suite of altogether different applications, then a threshold issue is to discern what those applications are so that relevance and discoverability can be evaluated. Ford's submission includes the declaration of Mr. Jim Beardslee, who states that PDOR2 provides distinct functionality different from that provided by PDO (sometimes also called PDOR1), and that PDOR2 is not a new release of PDOR1. He further states that PDOR2 includes four separate applications: (1) the “Change Management” application; (2) the “Mix Rates and Price” application; (3) the “Pricing Companion Tool” application; and (4) a security utility application. Ford also submitted user manuals for the first three of the four applications, and stated that there is no similar manual for the fourth one, which does not relate to user permissions for PDOR1 and does not replace any functionality within PDOR1.
Versata points to peripheral documents related to apparent functionality of software generally referred to as PDOR2, such as internal emails and presentations describing them. The submissions strongly suggest that PDOR2 applications work in some fashion with either PDO or data that is created or used by PDO, but appear to blur the distinction between the two. Versata contends that some references suggest certain functionality of the general type that is accused in this action (such as rule authoring) is performed by PDOR2, but again the supporting documents do not clearly indicate that any of the four applications listed above provide such functionality.
During the teleconference, Versata conceded that it had no evidence that would refute the proposition that PDOR2 includes the suite of four separate applications identified by Ford, and nothing more. Ford surely has updated or revised PDO since the time of the production of its PDO source code to Versata, but the updates are considered changes to PDO rather than the creation of a body of code called PDOR2. Based on the record and argument of counsel, I conclude that PDOR2 is limited to the collection of four separate applications, including: (1) the “Change Management” application; (2) the “Mix Rates and Price” application; (3) the “Pricing Companion Tool” application; and (4) a security utility application.
Whether PDOR2 is Relevant
*5 In view of the defined scope of PDOR2, the next question is whether it is relevant and discoverable. Subject to Civil Rule 26(b), a party is allowed to request production of documents and tangible things in another party's possession, custody or control. Rule 26(b) instructs that a party may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense. Fed. R. Civ. P. 26(b)(1). If a party fails to make a requested discovery, including if that party's discovery response is evasive or incomplete, the requesting party may move for an order compelling discovery. Fed. R. Civ. P. 37; see also Mahavisno v. Compendia Bioscience, Inc., 2015 U.S. Dist. LEXIS 131147, 3-4 (E.D. Mich. Sept. 29, 2015).
Many courts have addressed the discoverability of source code in circumstances where the relevance of the source code is in question, or where it has not been articulated with particularity. As the court explained in Mahavisno, “the issue before the Court is whether the pipeline code is relevant to any party's claim or defense under Rule 26(b)(1).” Id., at 3-4. See also, e.g., Telspace, LLC v. Coast to Coast Cellular, Inc., 2014 U.S. Dist. LEXIS 123625, 10-12 (W.D. Wash. Sept. 3, 2014) (“Before disclosure of Defendant's source code will be allowed, telSPACE must show that either the source code is relevant in its entirety or narrow its request to seek disclosure of only those original, protectable aspects of its Software.”). Commonly, a product must be accused of infringement in order to make it relevant and therefore discoverable. See Invensas Corp. v. Renesas Elecs. Corp., 287 F.R.D. 273, 279 (D. Del. 2012) (holding discovery on unaccused products to be proper where the plaintiff can “articulate, in a focused, particularized manner,” its reasons for suspecting that the unaccused product infringes).
To the extent patent infringement is the source of relevance (and at least in part Versata's briefing states that it is), relevance is governed by Federal Circuit law rather than the law of the regional Circuit. Drone Techs., Inc. v. Parrot S.A., 838 F.3d 1283, 1299-1300 (Fed. Cir. Sept. 29, 2016). The Federal Circuit has acknowledged that relevance is the touchstone of discoverability under Rule 26. See Micro Motion, Inc. v. Kane Steel Co., 894 F.2d 1318, 1323 (Fed. Cir. 1990) (explaining that discovery may not be had unless it is relevant to the subject matter of the pending action). In Drone Techs., the court reversed an order compelling the production of source code, finding that “Drone also failed to show its relevance or establish any need for the code as it relates to the operation of the accused products.” Drone Techs., 838 F.3d at 1299-1300.
Here, Versata has not established relevance of the PDOR2 source code in the sort of “focused, particularized manner” that would make it relevant. As Ford points out, none of Versata's infringement contentions directly accuse the PDOR2 applications, as defined above. Versata argues that the pleadings refer to PDO, and that PDO should be understood to be a generic name for all versions of PDO, including PDOR2. Ford counters that PDOR2 is not a new version of PDO (as discussed above) and that its declaratory judgment claim related to PDO was filed before PDOR2 had been created. Because PDOR2 did not exist at the time, it could not have been the express subject of the pleadings.
The request for supplemental briefing asked Versata to state whether it seeks source code for the suite of four applications that comprise PDOR2, and to articulate how those applications are accused and at issue such that the source code would be relevant and discoverable. Versata's Supplemental Opening Letter of June 20, 2017 (see Exhibit 4) did not address this question, and instead Versata maintained that PDOR2 was discoverable because it was a new version of PDO. Versata's Supplemental Reply Letter of June 21, 2017 (see Exhibit 6) did address this question, but at a superficial level. At the teleconference, Versata was asked to articulate how, if at all, any of the four applications that comprise PDOR2 have been accused of infringement, and Versata conceded that they have not been accused. Versata was also asked to articulate, in a focused and particularized manner, how it believes the production of PDOR2 source code would be likely to lead to an accusation of infringement. Versata could not do so, and at this stage the possibility that PDOR2 infringes any rights of Versata is based only on speculation.
*6 PDOR2 has not been shown to be relevant to this action. The record demonstrates that it comprises a suite of four applications and that Versata has neither accused those four applications of infringement nor articulated how production of the source code is reasonably likely to lead to such an accusation.
Other Technical Documentation and Compliance with LR 7.1
As a partial response to the above questions regarding relevance, Versata stated that it did not have enough documentation to enable it to either accuse PDOR2 or state a focused and particularized basis for believing such an accusation would be possible after production of the source code. Ford contends that production of the user manuals alone should be enough, noting that they include screen displays and explanations for how to use the applications. Versata responded that it would like additional documents such as use cases, design documents, and testing documents for PDOR2. This sort of documentation was the subject of the motion addressed in my Preliminary Ruling of March 17, 2017. To the extent Versata contends that Ford's production of documentation following that Preliminary Ruling was insufficient to enable Versata to draw reasonable conclusions as to infringement, Versata could have requested further documentation. Indeed, in the present motion Versata's opening letter brief asked for technical documents that include use cases, design documents, and testing documents related to PDOR2. Ford objected to that part of Versata's current motion, asserting that the parties did not meet and confer about technical documents, and only conferred regarding source code.
The Court's Order Appointing Special Master expressly states that the parties must comply with the meet and confer requirements of Local Rule 7.1, and certify that they have done so in the opening letter. Versata's Opening Letter refers to “multiple meet-and-confers” between the parties, though not at the beginning of the letter. See Ellison v. Comm'r of Soc. Sec., 2017 U.S. Dist. LEXIS 36184, *13, n.8 (E.D. Mich. Feb. 22, 2017) (requiring the Rule 7.1 certification to be at the beginning of the brief). This Rule generally requires a face-to-face meeting or the equivalent. Int'l IP Holdings, LLC v. Green Planet, Inc., 2017 U.S. Dist. LEXIS 8693, *6-7 (E.D. Mich. Jan. 23, 2017). It further requires a certification that the movant explained the nature of the motion or request and its legal basis and requested but did not obtain concurrence in the relief sought. This Court has cautioned that the best practice is to require strict compliance with LR 7.1. Murphy v. Birkett, 2011 U.S. Dist. LEXIS 136102 (E.D. Mich. Nov. 28, 2011). Versata's statement in its Opening Letter falls short of the requirements of LR 7.1, instead more vaguely referring to multiple emails and meet-and-confers but without indicating that the parties discussed the nature of the motion and its legal basis but without obtaining concurrence.
Given the disagreement between the parties regarding whether there had been compliance with Local Rule 7.1, and in view of Ford's objection that there had not been compliance, in my June 15, 2017 request for supplemental briefing I asked Versata to provide the basis for any request for technical documentation (that is, which specific interrogatories, requests for production, or other forms of request were at issue), and to demonstrate that the parties met and conferred regarding such additional demands in advance of the motion (such as by providing a certification attesting to the specific date, time, and subject matter of such a conference). Versata did not respond to this portion of my request (see generally, Exhibit 4), and I conclude that it means the parties did not meet and confer in a manner that complies with LR 7.1, and that Versata agrees that the present motion does not include a request for anything beyond source code.
The Alleged Burden of Production, and Proportionality
*7 The parties submitted widely disparate positions on the extent of the burden involved in producing source code for the PDOR2 applications. Versata states that little or no expense would be involved, contending that PDOR2 code is already resident in the Accurev source code repository that houses the PDO code produced in discovery, and that all Ford would need to do is change the permissions to allow Versata to access it. Versata's position is supported by the declaration of its expert, Mr. Seth Krauss, who submits a screen capture showing files named PDOR2 within the repository. It is unclear from the declaration, however, what those files correspond to (such as whether they correspond to any one of the suite of four applications, or something altogether different).
Ford responds that production would be much more complicated than changing permissions. Although Ford does not explain what is included in the PDOR2 files that appear in the Accurev repository, Ford contends that they have been there since the time PDO source code was produced, and at that time the PDOR2 applications were not yet complete and were at most an early work in process. Ford further contends that at a minimum the production versions of PDOR2 are not on the Accurev repository, and that much more work would be required to produce them as a result. Ford also submits the declaration of Ms. Samantha Balinski, who works within Ford's IT department and contends that production of the PDOR2 source code would take about six weeks and cost about $243,220.
Versata challenges Ford's cost submission, arguing that at least some of the costs asserted by Ford should be unnecessary, such as acquisition of an entirely new repository and licenses for hosting the discovery versions. According to Versata, all that must be done is to make a copy of the source code and place it on the current Accurev repository. Although the precise magnitude of effort involved may still be the subject of debate, the record shows that there is at least some burden involved, and it would require more than simply changing permissions to allow access.
Versata's objection to the Preliminary Ruling takes issue with deference shown to Ford's claim of burden in producing the source code. To be clear, I have given Ford no deference on this issue and I do not accept that Ford's assertion regarding total cost is correct. Instead, I note that the two parties are very far apart on this issue, and that the correct measure of burden appears to be somewhere in the middle. Production of PDOR2 source code is not as simple as changing permissions as Versata argues, because the PDOR2 code in the Accurev repository is too old and Ford would need to make the current and completed version available. Likewise, because there is an existing Accurev repository already established, it appears that some of the costs in Ford's declaration may be overstated or redundant. Ultimately, the submissions establish that there would be considerable effort required in making the PDOR2 source code available, though the exact measure of that effort is less clear.
Conclusion and Recommendation
*8 I recommend that Versata's motion for PDOR2 source code and technical documentation should be denied. The record shows that PDOR2 comprises a suite of four applications that have not been expressly accused of infringement, and Versata acknowledges that it cannot articulate how the production of the source code is likely to lead to such an accusation. Instead, the production would allow Versata to analyze it in order to form an opinion as to infringement or noninfringement, such that Versata's request is based principally in speculation. With respect to PDOR2-related technical documentation, separate from the source code, I conclude that Versata did not satisfy Local Rule 7.1 and therefore recommend that Versata's request for such documentation must be denied.