1 

UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF MICHIGAN 

SOUTHERN DIVISION 

FORD MOTOR COMPANY, 

 Plaintiff, Case No. 15-cv-10628 

 (consolidated with Case No. 15-11624) 

v. Hon. Matthew F. Leitman 

VERSATA SOFTWARE, INC. et al.

 Defendants. 

_________________________________/ 

ORDER SUSTAINING IN PART VERSATA’S OBJECTIONS (ECF #305) TO 

REPORT AND RECOMMENDATION OF THE SPECIAL 

MASTER TO DENY VERSATA’S MOTION TO COMPEL 

PDOR2 SOURCE CODE (ECF ## 300, 301) 

 In this action, Versata Software Inc. and other related Defendants (collectively, 

“Versata”) allege that Ford Motor Company infringed certain patents and 

misappropriated certain trade secrets when Ford developed an automotive configuration 

software program called “PDO.” During discovery, Versata asked Ford to produce the 

source code for computer software Ford called “PDOR2.” Ford refused. Versata 

thereafter filed a motion to compel with attorney Lawrence D. Graham, the Courtappointed discovery master in this action. 

Pursuant to the protocol established in the Court’s order appointing Mr. Graham 

(see ECF #230), Mr. Graham issued a Report and Recommendation in which he 

recommended that the Court deny Versata’s motion to compel (the “R&R”). (See ECF 

## 300, 301.) On August 24, 2017, Versata filed objections to the R&R. (See ECF 
2 

#305.) Ford filed a response (see ECF #308) and the parties filed supplemental 

submissions (see ECF ## 312, 315). The Court held a telephonic hearing on Versata’s 

objections on October 19, 2017. For the reasons explained below, the Court 

SUSTAINS IN PART Versata’s objections and will require Ford to produce the 

PDOR2 source code at Versata’s expense. 

I 

For more than a decade, Ford licensed automotive software called “ACM” from 

Versata. (See First Am. Counterclaim at ¶8, ECF #163 at Pg. ID 8322.) ACM provided 

a rule-authoring function that assisted Ford in the configuration of its vehicles. (See id.

at ¶38, Pg. ID 8239-30.) 

 Versata alleges that in 2011, “Ford began an internal project to replace [ACM] 

and develop software that would perform the same functions.” (Id. at ¶41, Pg. ID 8330-

31.) Ford named this software “Product Definition and Offer” or “PDO.”1 (Id.) Versata 

alleges that PDO, like ACM, is rule-authoring software that allows Ford to configure 

the vehicles it manufactures: 

[PDO]—like ACM—is a back-end system used to configure 

vehicles from billions of possible combinations of parts, 

features, and options. When a Ford dealer attempts to place 

an order through Ford’s Web Based Dealer Ordering 

                                                            

1

 Ford initially named the software “Total Configuration Management” or “TCM.” 

(First Am. Counterclaim at ¶41, ECF #163 at Pg. ID 8331.) Versata therefore refers 

to the software throughout its First Amended Counterclaim as “TCM.” But Versata 

further alleges that Ford later changed the name of the software to “PDO.” (Id.) Ford 

also refers to this software as “PDOR1.” For ease of reference, the Court will refer 

to this software in this Order as “PDO.” 
3 

(“WBDO”) system—for example, an order for 250 Ford 

Mustangs in different colors with sunroofs and 20 inch 

wheels—[PDO] supplies the ‘rules’ that ensure 

configuration results in an integrated, working vehicle 

system that Ford is able to manufacture and sell. Likewise, 

when a retail customer attempts to customize a Ford F-150 

pickup using Ford.com, [PDO] ensures that the customer is 

only able to select options that Ford could build. 

(Id. at ¶38, Pg. ID 8329-30.) Versata insists that “Ford incorporated Versata’s patented 

technologies and trade secrets into [PDO] and used these technologies to replace 

[ACM].” (Id. at Pg. ID 8304; see also Pg. ID 8305.) Versata maintains that Ford 

“willfully continues to infringe [Versata’s patents] by using [PDO].” (Id. at ¶¶ 73, 

78, Pg. ID 8339-40.) 

 In January 2017, while Versata was conducting a discovery review of the PDO 

source code, Versata “discovered that in addition to the PDO [source] code repository, 

Ford also maintain[ed] on the same server a ‘PDOR2’ ... code repository that Versata’s 

reviewers could not access.” (Versata Objections, ECF #305 at Pg. ID 15781.) Versata 

sought access to the PDOR2 source code repository, and Ford refused. Ford insisted 

that PDOR2 was not an accused product in this action. (See R&R, ECF #301 at Pg. ID 

15180.) Ford contended that PDOR2 did not include a rule-authoring function and that 

it therefore had distinct functionality from PDO (the product that Versata did accuse), 

and Ford argued that producing the PDOR2 source code would impose a significant 

burden. (See id.) 
4 

On May 19, 2017, Versata filed a motion with Mr. Graham seeking entry of an 

order that compelled “Ford to produce all manuals and technical documents (including 

cases, design documents, and testing documents) related to PDOR2 and provide Versata 

with access to the PDOR2 source code.” (ECF #301-2 at Pg. ID 15197.) Versata argued 

that it was entitled to the PDOR2-related documents and to the PDOR2 source code 

because “PDOR2 is...the second revision or iteration of PDO – the very software 

accused of patent, trade secret, and copyright infringement in this case.” (Id. at Pg. ID 

15195.) Versata further identified certain Ford documents that, according to Versata, 

demonstrated that “PDOR2 performs rule-authoring,” just like PDO. (Id. at Pg. ID 

15196, citing Pg. ID 15201.) Versata insisted that there was good reason to question 

the bright-line distinction Ford had drawn between the rule-authoring PDO software 

and PDOR2. 

 Ford responded that that PDOR2 was “not accused in this litigation and [was] 

not relevant to either party’s claims or defenses.” (See ECF #301-3 at Pg. ID 15243.) 

Ford explained that while PDO is a “rule-authoring application [that] replaced 

[Versata’s] ACM application,” PDOR2, in contrast, is “a set of [four] separate 

applications[] which provide a different set of functionality than the accused PDO[] 

rule-authoring application.” (Id.) Ford stressed that PDOR2 was “neither a replacement 

for, nor a new version of, the accused PDO[] application.” (Id.) Finally, Ford claimed 

that producing the PDOR2 source code would “impose a significant burden on Ford” 

that would require “months of work.” (Id. at Pg. ID 15245.) 
5 

 On August 14, 2017, Mr. Graham issued the R&R in which he recommended 

that the Court deny Versata’s request for the PDOR2 source code and documents. (See 

R&R, ECF #301.) Mr. Graham first recounted the procedural history of Vesata’s 

request that the Court described above. He then turned to the question 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.” (Id. at Pg. ID 15184.) Mr. Graham 

acknowledged that Versata had identified some Ford documents which “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.” (Id. at Pg. 

ID 15185.) But Mr. Graham ultimately concluded that while those documents may 

“suggest certain functionality of the general type that is accused in this action (such as 

rule authoring) is performed by PDOR2 ... the supporting documents do not clearly 

indicate that any of the four applications [that comprise PDOR2] provide such 

functionality.” (Id.) 

 Next, Mr. Graham addressed whether PDOR2 was “relevant and discoverable.” 

(Id.) He explained that “[t]he record demonstrates that [PDOR2] 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.” (Id. at Pg. ID 15188.) In reaching this conclusion, Mr. 

Graham rejected Versata’s argument that its pleadings do accuse Ford of infringement 

with respect to PDOR2: 
6 

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 .... 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 ... 

and that its declaratory judgment claim related to PDO was 

filed before PDOR2 had been created. Because PDOR2 did 

not exist at that time, it could not have been the express 

subject of the pleadings. 

(Id. at Pg. ID 15187.) 

 Mr. Graham also addressed Ford’s contention that producing the PDOR2 source 

code would be unduly burdensome. He noted that the two parties were “very far apart 

on this issue, and that the correct measure of burden appears to be somewhere in the 

middle.” (Id. at Pg. ID 15191.) He concluded that “the submissions establish[ed] that 

there would be considerable effort required in making the PDOR2 source code 

available, though the exact measure of that effort is less clear.” (Id.) 

 Finally, Mr. Graham addressed Versata’s request for the PDOR2 “cases, design 

documents, and testing documents.” (Id. at Pg. ID 15188-89.) He determined that 

Versata’s request for these documents was not properly before him because Versata had 

failed to show that it conducted a “meet and confer” with Ford with respect to those 

documents as the Court’s local rules require. (Id.) 
7 

II 

 Versata objects to the R&R on three grounds. The Court has conducted a de 

novo review of the portions of the R&R to which Versata has objected, and it will 

address each objection in turn. 

A 

 Versata first challenges Mr. Graham’s conclusion that PDOR2 is not relevant to 

the claims or defenses in this action because PDOR2 is not an accused product. (See 

ECF #305 at Pg. ID 15784.) According to Versata, “PDOR2 is a component of PDO” 

and performs the same rule-authoring functions as PDO. (Id. at Pg. ID 15780, 15784-

85.) Versata therefore insists that PDOR2 is part of the “accused software.” (Id.) Ford 

responds that “Versata blurs the distinction between the accused PDO[] rule-authoring 

software and the separate PDOR2 suite of applications.” (ECF #308 at Pg. ID 15852.) 

According to Ford, because the PDOR2 suite of applications is entirely separate from 

PDO, PDOR2 cannot be considered to be an “accused product” and is not relevant to 

this action. 

The Court concludes that Versata has raised a sufficient question as to whether 

PDOR2 is an accused product to warrant at least some discovery into PDOR2. More 

specifically, Versata has submitted certain Ford documents that arguably support 

Versata’s contention that PDOR2, like PDO, is rule-authoring vehicle configuration 

software. One such Ford document states that PDOR2’s functionality “will be built on 

top of the [PDO] Authoring Foundation” and implies that part of PDOR2 will involve 
8 

“direct authoring of product definition.” (ECF #305-1 at Pg. ID 15818.) Another Ford 

document states that the “future state vision” of PDOR2 includes creating “common 

global processes for authoring all aspects of product definition.” (ECF #305-2 at Pg. ID 

15200.) Finally, a slide from a Ford presentation appears to state that PDOR2 will 

include “direct authoring” and will “expand authoring to include all specialty vehicles.” 

(ECF #301-2 at Pg, ID 15232.) As Mr. Graham correctly concluded, these Ford 

documents perhaps suggest PDOR2 performs “certain functionality of the general type 

that is accused in this action (such as rule authoring)....” (R&R, ECF #301 at Pg. ID 

15185.) 

To be sure, Ford counters with strong evidence that PDOR2 does not perform 

the same rule-authoring function as PDO. That evidence includes the sworn declaration 

of Jim Beardslee, an employee in Ford’s product development department. (See ECF 

#308 at Pg. ID 15165-66.) Mr. Beardslee attests that while PDO “replaced the 

functionality of the [ACM software] that Ford formerly licensed from Versata,” PDOR2 

is “a separate set of applications that provide[s] distinct functionality from that provided 

by PDO[].” (Id. at Pg. ID 15165.) Mr. Beardslee adds that the various functions of the 

PDOR2 software “[did] not replace the functionality of the PDO[] application.” (Id. at 

15165-66.) He concludes that “PDO ‘R2’ is not a new release of PDO[].” (Id. at 15165.) 

It is certainly possible, if not likely, that Ford will ultimately persuade the Court 

that PDOR2 is sufficiently distinct from PDO such that PDOR2 cannot be considered 

an accused product in this action. However, at this point in the proceedings, the Court 
9 

cannot conclusively determine that PDOR2 is not accused, and the Court believes that 

Versata has sufficiently connected PDOR2 to its claims so as to warrant at least some 

basic discovery into PDOR2. The link between PDOR2 and Versata’s claims is, 

admittedly, not a strong one and does not yet warrant extensive and burdensome 

discovery into PDOR2. But, as described below, the Court will, at this time, permit 

Versata to review the PDOR2 source code.2

B 

 Versata next objects to Mr. Graham’s conclusion that it would be burdensome 

for Ford to produce the PDOR2 source code to Versata. (See ECF #305 at Pg. ID 15788-

89.) The Court shares Mr. Graham’s assessment of the burden. 

 Mr. Graham carefully evaluated the competing arguments both Ford and Versata 

made with respect to the burden required to make the source code available, and he 

concluded that “there would be a considerable effort required [by Ford] in making the 

PDOR2 source code available.” (R&R, ECF #301 at Pg. ID 15191.) While Mr. Graham 

could not definitively define “the exact measure of that effort” (id.), there is support in 

the record for his conclusion. Specifically, Ford submitted the declaration of IT 

employee Samantha Balinski, who declared that: 

                                                            

2

 Nothing in this Order should be understood to suggest that the Court is inclined to 

conclude that PDOR2 is an accused product or that the Court will permit 

introduction of evidence concerning PDOR2 at trial. The Court’s sole determination 

here is that Versata should be permitted to review the PDOR2 source code during 

discovery. 
10 

[The] [c]urrent source code for the PDR2 applications is 

maintained in an active repository that is used to support 

Ford’s day-to-day business activities. Because of this, 

establishing a review environment that can be inspected and 

analyzed by Versata’s experts requires that Ford create a 

separate repository that is isolated from the active repository 

supporting Ford’s day-to-day business activities. 

(ECF #316 at ¶11, Pg. ID 15945-46.) 

Based on the Court’s independent review of the record, it agrees with Mr. 

Graham’s assessment that “there would be considerable effort required in making the 

PDOR2 source code available.” (R&R, ECF #301 at Pg. ID 15191.) Given that 

“considerable effort,” and the fact that Versata has only minimally established the 

relevance of PDOR2 for discovery purposes, the Court does not believe that Ford 

should bear the expense of making the PODR2 source code available to Versata to 

review. Accordingly, if Versata wishes to review the PDOR2 source code, it shall pay 

Ford’s reasonable costs associated with making that code available. See, e.g., 

Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 358 (1978) (“The presumption is 

that the responding party must bear the expense of complying with discovery requests, 

but he may invoke the district court's discretion under Rule 26(c) to grant orders 

protecting him from ‘undue burden or expense’ in doing so, including orders 

conditioning discovery on the requesting party's payment of the costs of discovery”); 

Laethem Equipment Company v. Deere & Company, 261 F.R.D. 127, 145-46 (E.D. 

Mich. 2009) (quoting Oppenheimer and requiring “the party seeking discovery to pay 

for the cost of finding and producing it”). To the extent Versata objects to the 
11 

reasonableness of the costs claimed by Ford to make the PDOR2 source code available, 

those disputes shall be submitted to and resolved by Mr. Graham (pursuant to the 

protocol previously established by the Court). 

III 

Finally, Versata objects to a portion of Mr. Graham’s R&R that is not related to 

the PDOR2 source code. In this objection, Versata challenges Mr. Graham’s refusal to 

recommend that the Court compel Ford to produce certain “cases, design documents, 

and testing documents” related to the PDOR2 software. (ECF #305 at Pg. ID 15789-

90.) Mr. Graham determined that Versata’s request for these documents was not 

properly before him because Versata did not meet and confer with Ford concerning the 

request. (R&R, ECF #301 at Pg. ID 15188-89.) 

 The Court does not reach the question of the sufficiency of the meet and confer 

process because, for the time being, the Court is limiting discovery related to PDOR2 

to Versata’s review of the PDOR2 source code. If Versata’s review of that code reveals 

further reason to believe that PDOR2 is an accused product, then the Court will consider 

whether to allow Versata to conduct additional discovery regarding PDOR2. 

IV 

The Court believes that allowing Versata to review the PDOR2 source code on 

the terms set forth above (while at the same time barring Versata from conducting any 

further discovery into PDOR2 without further permission) strikes an appropriate and 

reasonable balance between the parties’ competing interests for the time being. 
12 

Accordingly, for the reasons stated above, Versata’s objections to the R&R (ECF #305) 

are SUSTAINED IN PART as follows: 

 Ford shall make the PDOR2 source code available for Versata’s review; 

 Versata shall be responsible for all reasonable costs associated with making the 

PDOR2 source code available for review; and 

 Versata shall not conduct any additional discovery into PDOR2 unless and until 

this Court enters a written order permitting it to do so. 

IT SO ORDERED. 

 s/Matthew F. Leitman 

 MATTHEW F. LEITMAN 

 UNITED STATES DISTRICT JUDGE 

Dated: October 25, 2017 

 I hereby certify that a copy of the foregoing document was served upon the 

parties and/or counsel of record on October 25, 2017, by electronic means and/or 

ordinary mail. 

 s/Holly A. Monda 

 Case Manager 

 (810) 341-9764