Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_02-cv-00710/USCOURTS-cand-4_02-cv-00710-4/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

NORTHERN DISTRICT OF CALIFORNIA

IMMERSION CORPORATION, 

 Plaintiff,

 v.

SONY COMPUTER

ENTERTAINMENT AMERICA,

INC.; SONY COMPUTER

ENTERTAINMENT, INC.; and

MICROSOFT CORPORATION, 

 Defendants.

____________________________

AND RELATED

COUNTERCLAIMS

No. C-02-0710 CW (WDB)

ORDER RE FOUR

CONSOLIDATED MOTIONS TO

COMPEL DISCOVERY AND

PLAINTIFF'S MOTION FOR A

PROTECTIVE ORDER

On November 15, 2005, the court heard oral argument in connection with the

parties' motions, docket numbers 1766, 1770, 1783, 1787, and 1791.

For the reasons set forth in full during the hearing, the court ORDERS as follows.

PLAINTIFF'S MOTION FOR A PROTECTIVE ORDER (D.N. 1766)

Through its Motion for a Protective Order, Immersion asks the court for relief as

to several different matters. In the numbered paragraphs that follow, we address each

such matter in turn.

1. Plaintiff seeks to prohibit defendant from using the depositions of Matt

Marsala and Paul Heilman. Although Sony provided plaintiff with only three days

notice, counsel for Immersion attended these depositions and cross-examined these

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individuals. Because Immersion has failed to establish that the testimony from these

deponents could not be useful to Judge Wilken as she addresses the merits of the Rule

60 issues, and because Immersion has failed to persuade the court that permitting Sony

to use this testimony would cause Immersion to suffer from an unfair disadvantage, the

court DENIES plaintiff's request for an order prohibiting Sony from using any of the

testimony given by either of these witnesses during their depositions. 

2. Because Immersion has persuaded the court that it is quite unlikely that a

deposition of John Maldjian or of Raymond Moser would shed probative light on any

of the primary factual issues raised by the Rule 60 motion (the interactions they allegedly

had with counsel for Immersion occurred just a couple of months ago, well after the

alleged fraud would have been committed on the court), the court PROHIBITS Sony

from deposing Messrs. Maldjian and Moser in these proceedings. 

3. Immersion also asks the court to prohibit Sony from deposing Morgan Chu,

Immersion's lead counsel during the trial and in these proceedings. Sony seems to

contend that Mr. Chu was an instrument of the alleged fraud on the court and that some

apparent imprecision during his closing argument evidences his complicity in the alleged

misconduct. 

 The court, however, has reviewed in context the statements in his closing

argument through which (in part) Mr. Chu is alleged to have misled the court and the

jury. Viewed in context, the accused statements do not appear significant -- and certainly

came nowhere near the center of Mr. Chu's pitch to the jury. 

 Immersion has reassured the court that Mr. Chu will not be a source of evidence

(in any form) in these Rule 60 proceedings. Moreover, according to Immersion, Mr. Chu

has never had any direct interaction with Mr. Thorner. 

It is likely that permitting Sony to depose Mr. Chu either would invade the

attorney-client privilege and Mr. Chu's work product (as well, perhaps, as Immersion's)

or would yield almost no relevant testimony at all. Moreover, if Mr. Chu were to

become a witness there is a distinct possibility that he could no longer serve as

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1Hereinafter, Irell & Manella shall be referred to as "Irell."

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Immersion's counsel in these proceedings. That development, of course, would shatter

the attorney-client relationship and deprive Immersion of counsel of its choice. 

In short, Immersion has persuaded the court that there is too little likelihood that

deposing Mr. Chu would yield evidence essential to a fair determination of the Rule 60

issues to justify the significant threats to important competing interests that taking his

deposition would entail. 

4. Because plaintiff does not intend to use the testimony of Dr. Robert Howe

(expert witness for plaintiff during the preceding trial) in connection with the Rule 60(b)

motion, and because Dr. Howe has not formed new opinions about any matters relevant

to that motion, the court also prohibits Sony from deposing Dr. Howe in these Rule 60

proceedings.

DEFENDANT'S MOTION TO COMPEL RESPONSIVE ANSWERS BY

IMMERSION'S DEPONENTS AND TO EXCLUDE TESTIMONY BY

IMMERSION'S DEPONENTS (D.N. 1787)

5. Sony asks the court to prohibit Immersion from using Stuart Smolen's

declaration or deposition testimony. While counsel for Immersion may have been

justified in stopping the deposition of Mr. Smollen (the court is not sure about this), it

is clear that the manner in which Immersion's counsel terminated the proceedings was

not professionally acceptable. That finding, however, does not conclude our inquiry.

Has Sony persuaded the court that Sony would suffer some unfair disadvantage if

Immersion were permitted to use this evidence? Or that the misconduct by Immersion's

counsel in terminating the deposition was so pronounced that the appropriate sanction

is to bar Immersion from using testimony from Mr. Smolen? Because the answer to

both of these questions is no, the court DENIES this motion. 

6. The court also DENIES defendant's request to compel Laura Peter, general

counsel to Immersion, to disclose whether Irell & Manella1 had copies of the alleged

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offer by Immersion to purchase Mr. Thorner's '840 patent and/or copies of Immersion's

license of Mr. Thorner's '722 patent. Because neither patent was prior art when plaintiff

responded to defendant's document request number 185, Irell reasonably objected to that

request on the basis of relevance. It follows that compelling Ms. Peter to disclose

matters otherwise protected by the work product doctrine and/or the attorney-client

privilege is quite unlikely to yield information material to Judge Wilken's ability to

resolve fairly the issues raised by the Rule 60 motion. 

7. Sony asks the court to compel Ms. Peter to describe the efforts undertaken

by Immersion to locate documents responsive to request number 185 and documents

about any offers to purchase patents from Mr. Thorner or to secure a license from Mr.

Thorner under his patents. The court DENIES this request because compelling Ms. Peter

to provide this information would invade areas protected by the work product doctrine

and that invasion is not justifed where, as here, it is unlikely to yield significant evidence

pertaining to the Rule 60(b) motion.

8. Sony also seeks to preclude Ms. Peter from testifying about the purpose or

intended effect of her April 18, 2005 e-mail to Mr. Thorner. Immersion responds by

assuring the court that it does not intend to offer Ms. Peter's testimony about this e-mail

in connection with the Rule 60(b) motion. Therefore, the court DENIES Sony's request.

DEFENDANT'S MOTION TO COMPEL PRODUCTION OF HARD DRIVES FOR

INSPECTION (D.N. 1783)

9. The court DENIES defendant's request to allow an independent expert to

search Immersion's and Irell's hard drives to locate references to notes regarding the

October 2003 meeting between Mr. Thorner and Mr. Heinrich. 

Plaintiff represents that it conducted a thorough search for any such material and

has produced or logged everything that is responsive. Defendant has failed to persuade

the court otherwise. 

Defendant also failed to persuade the court that the purpose of the October 2003

meeting was to commit a crime or fraud.

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For these reasons, defendant has not established a legal justification for the

penetrating invasion of the attorney client privilege and work product protection it seeks.

DEFENDANT'S MOTION TO COMPEL PLAINTIFF AND ITS COUNSEL TO

PRODUCE DOCUMENTS REVEALING OR RELATING TO WHAT THEY WERE

TOLD BY CRAIG THORNER (D.N. 1770)

10. Sony seeks all documents relating to any communications from Mr. Thorner

to Immersion or Irell about Mr. Thorner's "non-patent public use" prior art. The

documents Sony seeks are presumptively protected by the work product doctrine and the

attorney-client privilege (e.g., Sony seeks documents that reflect how Irell assessed the

legal implications of communications from Thorner and what Irell told, in confidence, its

client, Immersion, about those implications). In its motion to compel, Sony advanced

several different arguments in support of its position. None were persuasive. The two

about which some comment is justified here sound in (1) waiver theory and (2) the

crime/fraud exception to the attorney-client privilege.

Waiver theory is rooted, primarily, in notions of fairness and voluntariness. In

these Rule 60 proceedings, Sony has attacked Immersion and its counsel -- accusing them

of intentionally deceiving not only a litigation opponent, but also the court. More

specifically, Sony has accused Immersion and Irell of intentionally concealing

information well known to them (for a long time) that would invalidate the patents in suit

-- and, in essence, of paying Mr. Thorner not to disclose that information either to the

court or to Sony. These are extremely serious allegations in any setting. They take on

added significance here -- because, if true, they would require the courts to vacate an 82

million dollar judgment that Immersion already has secured. 

When accused of such serious wrongdoing, Immersion and Irell need to defend

themselves. It is completely unfair (the key concept here) to require them to choose

between remaining silent in the face of such allegations (and, in consequence, losing the

82 million dollar judgment and their professional licenses) and "waiving" the protections

to which they otherwise would be fully entitled under the attorney-client privilege and the

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work product doctrine. In these circumstances, it also is hardly accurate to suggest that

by choosing to defend themselves in the only way they could (by disclosing what Mr.

Thorner communicated to them), they "voluntarily" relinquished a known right. 

Sony argues that at the time the subject communications occurred, Mr. Thorner was

a paid consultant to Immersion or a retained expert -- and that, as such, communications

with him fell within the privilege. Sony goes on to argue that by testifying about what

Mr. Thorner communicated to them, Immersion and Irell disclosed otherwise privileged

communications and thereby waived the privilege as to all other communications on the

same subject. We reject this line of reasoning. We do so in part because Sony has failed

to persuade us that it is appropriate (in this particular factual and legal setting) to

characterize Mr. Thorner as an expert retained for litigation purposes or as a paid

consultant who is the equivalent, for purposes of privilege doctrine, of a full-time

employee. Mr. Thorner's relationship with Immersion and Irell was non-linear, uneven,

mercurial and unpredictable. It also was marked by considerable tension. He routinely

seemed to want more from Immersion than Immersion was willing to give. It would have

been clear to any reasonably savvy business person or lawyer in Immersion's or Irell's

shoes that Mr. Thorner's path of future travel was not predictable. It was clear that he

might become an adversary in business or even in litigation. He might sue. So

Immersion and Irell needed to be a bit guarded and wary when they communicated with

him. There was no relationship of clear trust and confidence of the kind that should

attach between an attorney and client. Because of these facts, communications between

Mr. Thorner and Immersion and/or Irell were not on the same legal footing as

communications between Irell and Immersion. This is important -- because Sony

contends that communications with Mr. Thorner were communications with a client, such

that revealing them constitutes a waiver of the attorney-client privilege. To so conclude

would do violence not only to the reality of the relationships involved, but also to the

norms of fairness and voluntariness that inform doctrine in this arena. We decline to do

that violence.

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Sony also has contended that it has made a prima facie showing that the crime/fraud

exception to the attorney-client privilege attaches to these communications so that the

court should examine them in camera (or order them disclosed directly to Sony). In

support of this argument, Sony relies for the most part on the substance of its Rule 60

motion. In effect, Sony asks this court to anticipate Judge Wilken's ruling on the merits

of the motion. In essence, we are asked to issue a preliminary injunction. We also

decline this invitation. Sony has failed to make a showing, specific to any particular

communication, that there is a substantial basis for inferring that the purpose of the

communication was to further a fraud or crime. Absent such a communication-specific

showing, we cannot conclude that Sony has made a prima facie case that the crime/fraud

exception applies. 

For these and other reasons set forth during the hearing, we DENY Sony's motion.

PLAINTIFF'S MOTION TO COMPEL DEFENDANT AND ITS COUNSEL TO

PRODUCE DOCUMENTS WITHHELD ON PRIVILEGE GROUNDS (D.N. 1791)

11. Plaintiff seeks an in camera inspection of documents relating to

communications among Mr. Thorner, Mr. Russ, Mr, Russell, Mr. Gewirtz, and

defendant or Electro Source in connection with the $150,000 payment to Mr. Thorner

for certain licensing rights. 

In United States v. Zolin, 491 U.S. 554, 572 (1989), the Supreme Court

established a two step approach for determining whether a court should conduct an in

camera review to establish applicability of the crime-fraud exception. First, the

moving party must demonstrate "a factual basis to support a good faith belief by a

reasonable person" that in camera review may reveal evidence that the crime-fraud

exception applies. If the moving party satisfies the first step, the second prong of

Zolin's two-step approach directs the court to exercise its discretion in deciding

whether to conduct the in camera review. Zolin teaches that in exercising that

discretion, a trial court should take into account all the pertinent circumstances, the

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single most important of which seems to be the level of likelihood that the court will

find evidence that the communications in question were in fact made for the purpose

of facilitating the commission of a fraud or a crime. Id. 

Here, we FIND that whether plaintiff has made a sufficient showing under the

first prong of the Zolin test is a very close question. We have substantial worries

about what was actually going on in the interactions that resulted in the signing of the

license and the movement of $150,000.00 from Sony through Electrosource to Mr.

Thorner. 

Things aren't a whole lot clearer when we apply the second prong of the Zolin

test. While there certainly is some chance that an in camera review would uncover

evidence of improper behavior by defendant or its agents, it is this court's judgment

that the likelihood of doing so is not sufficient to justify the invasion of the privilege

that would occur if the court inspected the documents Immersion pursues. 

Therefore, the court DENIES plaintiff's request for an in camera inspection of

documents and/or communications pertaining to the interactions that led to the

licensing agreement and $150,000.00 payment to Mr. Thorner. 

IT IS SO ORDERED.

Dated: November 28, 2005 /s/ Wayne D. Brazil 

WAYNE D. BRAZIL

United States Magistrate Judge

Copies emailed to:

parties, 

CW, WDB, stats

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