Hong Kong uCloudlink Network Technology Limited v. SIMO Holdings Inc.

Background

uCloudlink sued Skyroam for infringement of its ’780 patent. The dispute before the court concerned uCloudlink’s motion to strike portions of the report by Skyroam’s damages expert, Douglas Kidder. Kidder offered an opinion about a reasonable royalty, and uCloudlink argued that the opinion depended on factual information about 2020 negotiations that Skyroam should have produced during discovery but did not.

Legal standard

Federal Rule of Civil Procedure 37(c) generally prevents a party from using information or a witness that it failed to disclose as required by the discovery rules, unless the failure was substantially justified or harmless. The party that failed to disclose the information bears the burden of showing substantial justification or harmlessness. The court identified five considerations commonly used to assess harmlessness or justification: the surprise to the opposing party, the ability to cure the surprise, disruption to trial, the importance of the evidence, and the explanation for the nondisclosure.

Court’s analysis

The court said there was a feasible argument that Skyroam’s failure to disclose the 2020 negotiations was substantially justified. Although the information might have responded to some discovery requests, the court found little indication that Skyroam would have known the information was relevant to reasonable royalties before learning from a February 2021 press release that uCloudlink had entered into a cross-license agreement with iQsim.

The court did not definitively decide whether Skyroam’s conduct was substantially justified. Instead, it concluded that uCloudlink had not shown prejudice that could have been avoided by uCloudlink. UCloudlink had been able to submit a supplemental report from its expert, Ms. Bennis, responding to Kidder’s reasonable-royalty opinion. Although uCloudlink said Bennis had not reviewed the negotiation documents when preparing that report, it did not show that her report would have materially changed if she had reviewed them.

The court also noted that uCloudlink did not promptly seek relief after learning about Kidder’s opinion. It did not ask the court to order more discovery or request additional time for Bennis to prepare her rebuttal. The court concluded that any prejudice uCloudlink claimed at that stage was largely caused by its delay, because prompt action could have allowed additional document production, a deposition about the negotiations, further information gathering, and another supplement to Bennis’s report.

Ruling

Judge Edward Chen denied uCloudlink’s motion to strike. The court found the matter suitable for decision without oral argument and vacated the hearing. It also sealed the entire order as a precaution, ordered the parties to meet and confer about what needed to remain sealed, and directed them to file a narrowly tailored sealing request within a week. The order disposed of Docket No. 238.