Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_12-cv-00911/USCOURTS-casd-3_12-cv-00911-3/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 35:271 Patent Infringement

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

PEREGRINE SEMICONDUCTOR

CORPORATION, a Delaware

corporation,

Plaintiff-Counterdefendant,

CONSOLIDATED CASE NO.:

3:12-CV-0911-H (WMC)

CONSOLIDATED WITH: 3:13-

CV-00725-H (WMC) 

ORDER DENYING

DEFENDANT’S MOTION FOR

AN ORDER TO SHOW CAUSE

REGARDING SANCTIONS

[Doc. No. 222]

vs.

RF MICRO DEVICES, INC., a North

Carolina corporation,

Defendant-Counterclaimant.

And Related Case

On April 8, 2014, Defendant RF Micro Devices, Inc. (“RFMD”) filed a motion

requesting that the Court issue an order to show cause why Plaintiff Peregrine

Semiconductor Corporation (“Peregrine”) should not be sanctioned for litigation

misconduct. (Doc. No. 222.) On April 28, 2014, Peregrine filed its opposition to

RFMD’s motion. (Doc. No. 244.) On May 5, 2014, RFMD filed its reply. (Doc. No.

245.) On May 5, 2014, the Court, pursuant to its discretion under Local Rule 7.1(d)(1),

submitted the motion on the parties’ papers. (Doc. No. 248.) TheCourt deniesRFMD’s

motion for an order to show cause.

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Background

In February, 2012, prior to the present action, Peregrine filed a complaint against

RFMD alleging patent infringement before the United States International Trade

Commission (“the ITC”). (Doc. No. 113-4, Ex. 2.) In conjunction with that proceeding,

the parties engaged in discovery. The parties agreed that the Court should give all

discovery propounded during the ITC action full weight in the current proceedings.

(Doc. No. 82-1 ¶ 7-10.) 

On April 13, 2012, Peregrine filed the present action against RFMD alleging

patent infringement, including infringement of U.S. Patent Nos. 7,123,898 (“the ’898

patent”) and U.S. Patent No. 7,860,499 (“the ’499 patent”). (Doc. No. 1.)

On August 20, 2012, Dr. Ronald Reedy reached out to Robert Benton on behalf

of Peregrine in order to determine whether Benton should have been named an inventor

of the ’898 and ’499 patents and to secure his rights in those patents for Peregrine.

(Doc. No. 99-5 ¶ 27.) Benton worked as a Senior RF Design Engineer in Peregrine’s

Campbell, California office from April, 1994 to December, 1997. (Doc. No. 99-5 ¶ 4;

Doc. No. 113-1 ¶ 1.) During his time at Peregrine, made inventive contributions to the

’898 and ’499 patents. (Doc. No. 97 ¶ 20.) Negotiations between Peregrine and Benton

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continued for several months. (Doc. No. 99-5 ¶¶ 28-38.)

On July 27, 2012, Peregrine produced a copy of engineer Mark Burgener’s lab

notebook in response to RFMD’s discovery request in the ITC action. (Doc. No. 152-2,

Ex. 1.) Peregrine redacted Page 137 of the notebook, believing at the time that the

document contained privileged information. (Id. at PERE84800149370; Doc. No. 172-

3 at 2.) On September 13, 2012, RFMD requested an unredacted copy of Page 137,

along with several other requests for production. (Doc. No. 152-2, Ex. 11.) On October

11, 2012, before responding to RFMD’s September 13, 2012 request for discovery,

Peregrine subsequently conceded that Benton should have been named as an 1

inventor for those patents. (Doc. No. 97 ¶ 20.)

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Peregrine elected to voluntarily dismiss the ITC action. (Doc. No. 113-2, Ex. 9.)

On August 22, 2013, Benton initiated negotiations to sell his rights in the ’898

and ’499 patents to RFMD. (Doc. No. 244-2, Ex. F.) On September 26, 2013, RFMD

purchased Benton’s rights in the ’898 and ’499 patents. (Doc. No. 172-2, Ex. K.)

On September 30, 2013, the Court lifted the stay on discovery in this action and

issued a scheduling order. (Doc. No. 91.) On December 6, 2013, RFMD requested that

Peregrine produce an unredacted copy of Page 137, along with several other requests

for production. (Doc. No. 152-3, Ex. 14.) On December 23, 2013, Peregrine produced

an unredacted version of Page 137, after determining the document was not privileged

and that it was inadvertently redacted during the ITC discovery. (Doc. No. 152-3 Ex.

15.) The unredacted version of Page 137 contains a clipping of a September, 2000

email chain among Peregrine executives. (Doc. No. 152-2, Ex. 5.)

On November 21, 2013, Peregrine filed an amended complaint, adding Benton

as a party. (Doc. No. 97.) On March 18, 2014, the Court granted RFMD’s motion to

dismiss the ’898 and ’499 patents on the grounds that Peregrine did not acquire the

necessary ownership rights to sue on the patents before filing its infringement claims.2

(Doc. No. 203.) On April 8, 2014, RFMD filed the present motion requesting that the

Court order Peregrine and its counsel to show cause why sanctions are not warranted

and for additional discovery and briefing on the topic of sanctions. (Doc. No. 222.)

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The Court also granted Benton’s motion to dismiss Peregrine’s causes of action 2

against him, and dismissed him as a defendant from the case. (Doc. No. 203 at 10.)

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Discussion

I. Sanctions Under Federal Rules of Civil Procedure 26 and 37

Federal Rule of Civil Procedure 26(g)(1) requiresthat an attorney responding to

a discovery request must certify that, “to the best of the person’s knowledge,

information, and belief formed after a reasonable inquiry” the response is warranted by

existing law, not interposed for any improper purpose, and reasonable. Fed. R. Civ. P.

26(g)(1). Rule 26(g)(3) provides for sanctions when an attorney or party improperly

certifies a discovery response. Fed. R. Civ. P. 26(g)(3). “The duty to make a

‘reasonable inquiry’ is satisfied if the investigation undertaken by the attorney and the

conclusions drawn therefromare reasonable under the circumstances. It is an objective

standard similar to the one imposed by Rule 11.” Fed. R. Civ. P. 26 advisory

committee’s note (1980).

Federal Rule of Civil Procedure 26(b)(5) requires that when a party withholds

otherwise discoverable material on the basis of privilege, that party must claim the

privilege and describe the nature of the withheld material. Fed. R. Civ. P. 26(b)(5). If

a party fails to comply with Federal Rule of Civil Procedure 26(b)(5), the Court may

issue remedial orders, including sanctions or attorney’s fees. Fed. R. Civ. P. 37(b)(2).

First, the Court notes that to the extent RFMD seeks sanctions under the Federal

Rules of Civil Procedure on the basis of Peregrine’s conduct before the ITC, the Court

lacks the power to sanction conduct that occurs in a different forum in a different case.

Trulis v. Barton, 107 F.3d 685, 694 (9th Cir. 1995). With respect to Peregrine’s

conduct before this Court, the circumstances do not indicate that Peregrine’s initial

redaction of Page 137 was conducted for an improper purpose orthat Peregrine’s initial

redaction of Page 137 was unreasonable. See Townsend v. Holman Consulting Corp.,

929 F.2d 1358, 1364 (9th Cir. 1990). Page 137 concerns a common topic of attorneyclient privilege, and therefore the initial reviewer’s decision to redact it, while flawed,

was not unreasonable. See, e.g., QualcommInc. v. Broadcom Corp., No. 05CV1958-B

(BLM), 2010 WL 1336937, at *6 (S.D. Cal. Apr. 2, 2010). Nor do the facts

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demonstrate that Peregrine withheld the unredacted version of Page 137 for an

improper purpose.

Peregrine’s production of privilege logs on a rolling basis does not constitute a

ground for sanctions under Rule 37. See Best Buy Stores, L.P. v. Manteca Lifestyle

Ctr., LLC, No. 2:10-CV-0389-WBS-KJN, 2011 WL 2433655, at *7 (E.D. Cal. June 14,

2011); Fed. R. Civ. P. 26(b)(5), 37(b)(2). RFMD has not disputed that both sides

produced privilege logs on a rolling basis. (See Doc. No. 244-2, Ex. C.) And

Peregrine’s decision to voluntarily terminate its action before the ITC before

completing all discovery in that matter is not improper. See Smith v. Lenches, 263 F.3d

972, 979 (9th Cir. 2001).

After reviewing the record, the Court determines that Peregrine’s initial

redaction of Page 137 was a reasonable error in the context of the parties’ discovery

process. Such a reasonable error, subsequently corrected by Peregrine in a timely

fashion when discovery resumed in this case, cannot support the imposition of

sanctions by the Court under Federal Rules of Civil Procedure 26 and 37.

II. Sanctions Under Federal Rule of Civil Procedure 11

Under Federal Rule of Civil Procedure 11(b), an attorney must certify that to the

best of the attorney’s knowledge, information, and belief, formed after an inquiry

reasonable under the circumstances, all factual contentions made to the Court have

evidentiary support or will likely have evidentiary support after a reasonable

opportunity for discovery. Fed. R. Civ. P. 11(b). Rule 11 “deters ‘baseless filings’ by

requiring a ‘reasonable inquiry’ that there is some plausible basis for the theories

alleged.” Strom v. United States, 641 F.3d 1051, 1059 (9th Cir. 2011) (citing Cooter

& Gell v. Hartmarx Corp., 496 U.S. 384, 393 (1990)).

Federal Rule of Civil Procedure 11(c) provides that a court may impose

sanctions if the court determines that an attorney or party violated Rule 11(b). Fed. R.

Civ. P. 11(c). Rule 11 does not apply to discovery disputes governed by Rules 26 and

37. Fed. R. Civ. P. 11(d); Christian v. Mattel, Inc., 286 F.3d 1118, 1130 (9th Cir.

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2002).

RFMD does not identify a particular filing by RFMD that fails to meet the

standard of Rule 11. It appears that RFMD’s motion seeks for the Court to begin an

inquiry into whether Peregrine violatedRule 11 by litigating this action without having

complete legal rights in the ’898 and ’499 patents. (See Doc. No. 222-1 at 1.) Such an

inquiry is not necessary, because on the present record, the Court determines that

Peregrine had a cognizable argument that it was the legal owner of the patents,

regardless of whether Benton was an inventor on those patents. Rachel v. Banana

Republic, Inc., 831 F.2d 1503, 1508 (9th Cir. 1987) (“Rule 11 is not intended to permit

sanctions just because the court later decides that the lawyer was wrong.”) (internal

quotation marks omitted). Accordingly, the Court cannot conclude that any of

Peregrine’s filings violated Rule 11(b)’s prohibitions.

III. Sanctions Under the Court’s Inherent Authority

Sanctions under a court’s inherent authority are predicated on a finding of bad

faith conduct in litigation. Mendez v. County of San Bernardino, 540 F.3d 1109, 1131

(9th Cir. 2008). “A finding of bad faith is warranted where an attorney ‘knowingly or

recklessly raises a frivolous argument, or argues a meritorious claim for the purpose

of harassing an opponent.’” Rodriguez v United States, 542 F.3d 704, 709 (9th Cir.

2008) (internal brackets omitted) (quoting Primus Automotive Financial Services, Inc.

v. Batarse, 115 F.3d 644, 649 (9th Cir. 1997)). The level of misconduct required before

it is appropriate for a court to impose sanctions under its inherent authority is “a high

threshold.” Mendez, 540 F.3d at 1132 (citing Primus Auto., 115 F.3d at 649).

“Because inherent powers are shielded from direct democratic controls, they

must be exercised with restraint and discretion.” Roadway Express, Inc. v. Piper, 447

U.S. 752, 764 (1980). Furthermore, when a specific rule orstatute provides a court with

a mechanism to address litigation abuses, it is preferable to apply that rule or statute,

rather than invoke the court’s inherent powers. F.J. Hanshaw Enters., Inc. v. Emerald

River Dev., Inc., 244 F.3d 1128, 1136-37 (9th Cir. 2001).

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RFMD urges the Court to sanction Peregrine based on the “cumulative effect”

of on alleged “campaign of misconduct.” (Doc. No. 222-1 at 19-20.) To the extent that

RFMD’s allegations of a campaign of misconduct concern discovery disputes and

filings best addressed by the Federal Rules of Civil Procedure, the Court declines to

exercise its inherent powers to issue sanctions. F.J. Hanshaw, 244 F.3d at 1136-37.

RFMD also alleges that Peregrine engaged in misconduct by attempting to correct

inventorship ofthe ’898 and ’499 patents while pursuing its infringement claims before

this Court. (Id. at 15.) But attempting to correct an issue of inventorship, even during

an infringement suit, is permissible under 35 U.S.C. § 256. See, e.g., Viskase Corp. v.

Am. Nat. Can Co., 261 F.3d 1316, 1329 (Fed. Cir. 2001). The Court cannot conclude

that Peregrine acted in bad faith by attempting to remedy its inventorship issue. (See

Doc. No. 99-5 ¶¶ 28-38.) Accordingly, after reviewing the record, the Court declines

to exercise its inherent authority to sanction Peregrine. Roadway Express, 447 U.S. at

764.

Conclusion

Both parties engaged in contentious litigation with regard to the ’898 and ’499

patents. While RFMD prevailed in its motion to dismiss the causes of action for

infringement of the ’898 and ’499 patents from this case, RFMD has not succeeded in

demonstrating that Peregrine’s actions during this litigation were so unreasonable as

to warrant further discovery or briefing on the topic of sanctions. The Court denies

RFMD’s motion for an order to show cause why Peregrine should not be sanctioned

for litigation misconduct. 

IT IS SO ORDERED.

DATED: May 8, 2014

 

MARILYN L. HUFF, District Judge

UNITED STATES DISTRICT COURT

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