United States Court of Appeals 

for the Federal Circuit ______________________ 

In re: REARDEN LLC, REARDEN MOVA LLC, MO2, 

LLC, MOVA, LLC,

Petitioners

______________________ 

2016-125

______________________ 

On Petition for Writ of Mandamus to the United 

States District Court for the Northern District of California in No. 3:15-cv-00797-JST, Judge Jon S. Tigar.

______________________ 

ON PETITION

______________________ 

 Before MOORE, HUGHES, and STOLL, Circuit Judges. 

STOLL, Circuit Judge. 

O R D E R

The defendants in the underlying case, Rearden LLC, 

Rearden MOVA LLC, MO2, LLC, and MOVA, LLC,

petition for a writ of mandamus to challenge the district 

court’s order compelling them to produce allegedly privileged documents. We conclude we have jurisdiction to 

decide their petition. We further conclude that petitioners’ arguments fail to carry the high burden required on 

mandamus to overturn the district court’s discovery 

determination. We therefore deny their petition. 
2 IN RE: REARDEN LLC

BACKGROUND

A.

The central, underlying dispute in this case is one of 

ownership. Both sides claim ownership of visual effects 

technology known as “MOVA Contour Reality Capture” or 

“MOVA.” MOVA technology can capture an actor’s facial 

performance for use in motion picture special effects and 

video games. The technology is secured by trademarks, 

copyrights, trade secrets, and patents, including U.S. 

Patent Nos. 7,548,272 (the ’272 patent), 7,567,293 (the 

’293 patent), 7,605,861 (the ’861 patent), and 8,659,668

(the ’668 patent), and the technology is reflected in hardware, source code, and other physical assets, all of which

we will refer to collectively as the “MOVA assets.” Both 

sides assert ownership of the MOVA assets. Because the 

facts are so fiercely contested, we first set forth the basic 

versions of events of the parties. 

According to respondent Virtue Global Holding Limited’s (“VGHL”) version of events, Steve Perlman, the 

head of Rearden LLC and the other petitioners, declined 

an offer from OL2, Inc. to acquire the MOVA assets and 

proposed OL2 sell the assets instead to then-Rearden 

employee, Greg LaSalle. Perlman promised to provide 

legal resources to get the business off the ground and 

introduced LaSalle to Rearden’s corporate attorney who 

helped LaSalle establish his own company, MO2, LLC,1

and negotiate the asset transfer with OL2. 

In February 2013, respondent says Perlman demanded that LaSalle turn over the MOVA assets to Rearden. 

 

1 There are two separate entities named “MO2, 

LLC” involved in this case: this MO2 entity, which we 

will also refer to as original MO2, and the later-formed 

“MO2, LLC” that is a named defendant and petitioner. 
IN RE: REARDEN LLC 3

LaSalle’s refusal to turn over the assets resulted in his 

termination of employment with Rearden. MO2, acting 

through LaSalle, then sold the MOVA assets to Shenzhenshi Haitiecheng Science and Technology Co., Ltd. 

(“SHST”) on May 8, 2013. SHST hired LaSalle, and 

through SHST’s subsidiary, Digital Domain 3.0 (“DD3”), 

began to sell the technology to movie and videogame

studios. LaSalle then filed paperwork to dissolve MO2. 

VGHL subsequently obtained the MOVA assets from 

SHST. 

Petitioners agree that the MOVA assets were transferred to MO2 but assert that SHST never obtained 

ownership. They contend that Perlman and Rearden, not

LaSalle, formed original MO2 to acquire the MOVA assets 

and hired LaSalle to file the corporate paperwork, acquire 

the MOVA assets, and manage, all on Rearden’s behalf. 

They contend that, pursuant to his employment agreements, LaSalle assigned any rights in the MOVA assets to 

Rearden. They say that LaSalle was terminated before 

May 8, 2013, and lacked authority to act on MO2’s behalf. 

And, in any event, they assert, original MO2 transferred 

the MOVA assets to Rearden MOVA LLC before the 

purported agreement between LaSalle and SHST. 

B.

This case began in February 2015. SHST filed a complaint in the United States District Court for the Northern District of California, alleging that petitioners had 

made “false or misleading representations of fact concerning the ownership of the MOVA Assets in a campaign to 

mislead the public and actual and prospective users and 

licensees of those assets,” including forming a second 

“MO2 LLC” named entity, falsely recording assignments 

of the MOVA patents from original MO2 to Rearden 

MOVA LLC, and making statements that they owned the 

assets. SHST sought a declaration that it owned the 

MOVA assets and that petitioners’ patent assignments 
4 IN RE: REARDEN LLC

were invalid. SHST also sought damages for alleged 

violations of California’s false advertising and unfair 

competition statutes. 

Petitioners answered that the claims were waived because SHST “knew that authority from at least one of the 

Defendants was required for the proper transfer of the

MOVA Assets.” Petitioners also counterclaimed, seeking

a declaration that they owned the MOVA assets, and

seeking damages against SHST for, among other things, 

infringement of the ’272, ’293, ’861, and ’668 patents. 

SHST soon thereafter purportedly sold the assets to 

respondent VGHL. With SHST stipulating that it would 

remain in the case as a counterclaim defendant, the 

district court granted a motion to substitute in March 

2016, and VGHL filed an amended complaint raising the 

same charges as raised in SHST’s complaint. Petitioners 

responded to the amended complaint by filing the same 

answers and counterclaims against SHST while adding a 

claim under the California Uniform Fraudulent Transfer 

Act.

During discovery, respondent moved to compel petitioners to produce documents exchanged between original 

MO2 and the corporate attorney that Perlman had introduced to LaSalle. The magistrate judge granted the

request, concluding that petitioners had not shown they

could assert attorney-client privilege on behalf of original

MO2 and that LaSalle waived the privilege when he 

shared the documents with DD3. Petitioners objected to 

the magistrate judge’s ruling. But the objections, the 

district court determined, did not establish that the 

magistrate judge’s findings and conclusions were clearly 

erroneous or contrary to law. The district court therefore 

denied the objections. In doing so, the district court

declined to consider an additional declaration from Perlman because it was not before the magistrate judge. 
IN RE: REARDEN LLC 5

DISCUSSION

A.

We turn first to respondent’s threshold argument, 

namely, that issuing mandamus here would not be “in aid 

of” our “jurisdiction[]” but instead that of the United 

States Court of Appeals for the Ninth Circuit. 28 U.S.C. 

§ 1651(a); see In re BBC Int’l, Ltd., 99 F.3d 811, 812–13 

(7th Cir. 1996) (“Mandamus anticipates an appeal. . . . 

But this assumes that the court from which mandamus is 

sought is the one that will hear the ultimate appeal.”). 

Our jurisdiction over cases from federal district courts 

is governed by 28 U.S.C. § 1295(a), which states that the 

Federal Circuit has appellate jurisdiction “in any civil 

action arising under, or in any civil action in which a 

party has asserted a compulsory counterclaim arising 

under, any Act of Congress relating to patents.” 

§ 1295(a)(1). “Because the concept of what constitutes a 

‘compulsory counterclaim’ now directly impacts our jurisdiction, it is governed by Federal Circuit law, rather than 

by that of the regional circuits.” Vermont v. MPHJ Tech. 

Invs., LLC, 803 F.3d 635, 644 n.2 (Fed. Cir. 2015). 

Congress amended our jurisdictional statute through 

the America Invents Act to broaden our jurisdiction to 

include compulsory counterclaims “arising under” patent 

law. Leahy–Smith America Invents Act, Pub. L. No. 112–

29, 125 Stat. 284 (2011). Previously, the Supreme Court’s 

decision in Holmes Group, Inc. v. Vornado Air Circulation 

Systems, Inc., 535 U.S. 826, 834 (2002), had effectively 

limited our jurisdiction to patent law claims asserted in a 

well-pleaded complaint. It was explained that the 

amendment to our jurisdictional statute, would counteract the potential for Holmes Group to “lead to an erosion 

in the uniformity or coherence in patent law that has been 

steadily building since the [Federal] Circuit’s creation in 

1982.” H.R. Rep. No. 109-407, at 5 (2006), subsequently 

“reaffirm[ed]” by H.R. Rep. No. 112-98, at 81 (2011). The 
6 IN RE: REARDEN LLC

amendment was “intended to provide federal courts, and 

this court specifically, with a broader range of jurisdiction; that is, with jurisdiction over claims arising under 

the patent laws even when asserted in counterclaims, 

rather than in an original complaint.” Vermont, 803 F.3d 

at 644. But while Congress extended our jurisdiction to 

ensure uniformity in patent law, that extension did not 

reach permissive counterclaims. Expressing the concern 

about the “possib[ility] that a defendant could raise 

unrelated and unnecessary patent counterclaims simply 

in order to manipulate appellate jurisdiction,” it has been 

argued that Congress limited our appellate jurisdiction to 

compulsory counterclaims relating to patent law. 157 

Cong. Rec. S1379 (daily ed. Mar. 8, 2011) (statement of 

Sen. Kyl). 

To determine whether a particular counterclaim is 

compulsory, we look to Federal Rule of Civil Procedure 

13(a). It provides that a compulsory counterclaim “arises

out of the transaction or occurrence that is the subject 

matter of the opposing party’s claim.” Fed. R. Civ. P. 

13(a)(1)(A). The requirement that a party must raise 

“counterclaims arising out of the same transaction or 

occurrence . . . was designed to prevent multiplicity of 

actions and to achieve resolution in a single lawsuit of all 

disputes arising out of common matters.” S. Constr. Co. v. 

Pickard, 371 U.S. 57, 60 (1962) (per curiam). Courts 

interpreting the scope of Rule 13(a)’s “transaction or 

occurrence” test “generally have agreed that these words 

should be interpreted liberally in order to further the 

general policies of the federal rules and carry out the 

philosophy of Rule 13(a).” 6 Wright & Miller, Federal 

Practice & Procedure § 1410, at 50–51 (3d ed. 2010). 

“[O]ur court has utilized three tests to determine 

whether the ‘transaction or occurrence’ test of Rule 13(a) 

is met: (1) whether the legal and factual issues raised by 

the claim and counterclaim are largely the same; (2) 

whether substantially the same evidence supports or 
IN RE: REARDEN LLC 7

refutes both the claim and the counterclaim; and (3) 

whether there is a logical relationship between the claim 

and the counterclaim.” Nasalok Coating Corp. v. Nylok 

Corp., 522 F.3d 1320, 1325 (Fed. Cir. 2008); see also In re 

EMC Corp., 677 F.3d 1351, 1358 (Fed. Cir. 2012). Here, 

the claims and counterclaims involve the same patents, 

they share overlapping legal and factual issues, and 

substantially the same evidence could refute both the 

claims of ownership and the counterclaims of infringement. The patent infringement counterclaims share a 

critical factual dispute with plaintiff’s2 state law claims: 

whether SHST obtained ownership of the MOVA assets 

on May 8, 2013. To make a case for patent infringement, 

counterclaimants will need to show that they, not respondent, own the MOVA assets. The success of plaintiff’s state law claims will similarly depend on how these 

factual issues are resolved. Moreover, the infringement 

claims rely in part on SHST’s unauthorized use of the 

disputed MOVA assets, including physical assets, whose 

ownership is in dispute. So the claims and counterclaims 

share a close, logical relation: the ownership and rightful 

use of the technology claimed and disclosed in the MOVA 

patents. See Vermont, 803 F.3d at 644. And plaintiff’s 

claims and petitioners’ counterclaims share substantial

 

2 While the district court subsequently entered default against SHST for not participating in discovery and 

set aside its substitution order, now allowing VGHL to 

assert the claims only as intervenor, we still look to the 

plaintiff’s operative complaint and the counterclaims at 

the time of filing to determine jurisdiction. See Jang v. 

Boston Sci. Corp., 767 F.3d 1334, 1338 (Fed. Cir. 2014) 

(“[T]he Federal Circuit’s exclusive appellate jurisdiction is 

predicated on the cause of action and the basis of the facts 

as they existed at the time the complaint or any compulsory counterclaim was filed.”). 
8 IN RE: REARDEN LLC

evidentiary overlap. See Nasalok, 522 F.3d at 1325. 

Petitioners’ counterclaims thus arise from the same 

transaction or occurrence as plaintiff’s claims. See Fed. R. 

Civ. P. 13(a). Finally, we note that concerns about not 

allowing defendants to manipulate jurisdiction through 

the addition of permissive counterclaims are not implicated here. See 157 Cong. Rec. S1379 (daily ed. Mar. 8, 

2011) (statement of Sen. Kyl). Rather, the counterclaims 

arise out of, and are indeed contingent upon, the very

dispute and the same patent rights asserted in the complaint. We thus find petitioners’ patent infringement 

counterclaims to be compulsory. As such, we have jurisdiction over any appeal of these claims and, hence, jurisdiction over this petition.

We note that this case stands in contrast to one where 

a plaintiff brings a suit contesting patent ownership and 

defendants have an infringement claim that matures 

after the filing of the complaint. In that situation, defendants are permitted to bring that claim in a later suit

or, under Rule 13(e), to seek leave to add the claim. See 

Fed. R. Civ. P. 13(e). The rule provides that “[t]he court 

may permit a party to file a supplemental pleading asserting a counterclaim that matured or was acquired by the 

party after serving an earlier pleading.” Id. That determination is, however, case specific. But here, where 

petitioners counterclaimed that plaintiff infringed the 

very patents over which both parties seek a declaration of 

ownership, and where the alleged infringing activity was 

known by petitioners at the time of filing, petitioners’ 

claims are compulsory counterclaims. 

B.

Applying regional circuit law, we review a denial of a 

request for an evidentiary hearing and a denial to supplement the record for an abuse of discretion, see United 

States v. Howell, 231 F.3d 615, 621 (9th Cir. 2000), and 

the district court’s factual findings for clear error, United 
IN RE: REARDEN LLC 9

States v. Graf, 610 F.3d 1148, 1157 (9th Cir. 2010). 

Moreover, because petitioners seek relief by way of mandamus, our review is particularly deferential: we will 

overturn the district court’s determinations on these 

issues only upon a showing of a “clear and indisputable” 

right to relief and no adequate alternative legal channels 

through which petitioners may obtain the same relief. 

Kerr v. U.S. Dist. Court, 426 U.S. 394, 403 (1976). Petitioners have fallen short of meeting that standard. 

Petitioners first argue that the district court erred on 

review of the magistrate judge’s order in not accepting a 

supplemental declaration from Perlman and not holding 

an evidentiary hearing on the issue. Petitioners, however, 

have not shown any error in these regards that is mandamus-worthy. While a district court may accept additional evidence and hold an evidentiary hearing, no case, 

including those cited by petitioners, holds that such a 

hearing or supplementation is a requirement. See Howell, 

231 F.3d at 621 (“[A] district court has discretion, but is 

not required, to consider evidence presented for the first 

time in a party’s objection to a magistrate judge’s recommendation”); see also id. at 620 (discussing hearings). 

Petitioners, moreover, have not shown a clear abuse of 

discretion on the part of the district court in refusing their

requests. The magistrate judge granted petitioners’ 

request to consider Perlman’s first declaration that was 

submitted to address the central issue in this discovery 

dispute—the ownership of the MOVA assets and control 

of original MO2 prior to when LaSalle entered into an 

agreement to sell the MOVA assets to SHST. Petitioners

failed to explain to the district court why they could not 

have submitted any added information to the magistrate 

judge or explain why a hearing in addition to the one held 

by the magistrate judge was necessary. 

Petitioners also suggest that the magistrate judge and 

district court erred in not deferring a ruling on the privi-
10 IN RE: REARDEN LLC

lege issue until after conclusively resolving who controlled 

the original MO2, and thus who had the right to assert 

the privilege. Yet petitioners cite no case that suggests 

that the magistrate judge and district court had no legal 

authority to enter their orders and render preliminary 

factual determinations on the ownership issue in order to 

resolve the privilege issue. Rather, they cite one case, 

United States v. Mett, 178 F.3d 1058, 1065 (9th Cir. 1999), 

which is not on point and states only the basic proposition

that “hard cases should be resolved in favor of the privilege, not in favor of disclosure.” 

Petitioners’ remaining arguments largely challenge

the district court’s conclusion that they could not assert 

the privilege on behalf of original MO2. Those arguments, at bottom, are attacks on the district court’s preliminary factual findings regarding whether Rearden 

MOVA acquired the MOVA assets from original MO2 

before LaSalle entered an agreement with SHST and 

whether Perlman and Rearden LLC (as opposed to 

LaSalle only) controlled and managed original MO2 such 

that they could assert the privilege. We decline to entertain mandamus relief on these arguments because petitioners rely heavily on Perlman’s extra-record declaration

and petitioners have alternative avenues to obtain meaningful review of these arguments after trial. See Mohawk 

Indus., Inc. v. Carpenter, 558 U.S. 100, 109 (2009). 

Accordingly, 

 IT IS ORDERED THAT: 

The petition is denied. 

 FOR THE COURT

November 17, 2016 /s/ Peter R. Marksteiner 

 Date Peter R. Marksteiner

 Clerk of Court