Electronic Scripting Products, Inc. v. HTC America, Inc.

Background

Electronic Scripting Products, Inc. (ESPI) sued HTC America, Inc. (HTC), alleging that some HTC virtual-reality products infringed ESPI’s patented designs. ESPI had initially named Valve Corporation as a defendant but later voluntarily dismissed certain aspects of the case involving Valve. Valve therefore was a non-party when ESPI issued the subpoena at issue.

Valve developed SteamVR Tracking, technology used in various virtual-reality devices, including HTC’s accused products. Valve stated that it did not manufacture or sell any of those accused devices. Before ESPI issued the subpoena, Valve had responded to a subpoena from HTC by producing source code and documents related to SteamVR Tracking and by preparing a corporate representative for a lengthy deposition. ESPI’s counsel participated in and questioned that representative.

On July 2, 2021, ESPI served Valve with another subpoena requiring a corporate representative to testify about seven topics and requiring documents in eight categories. The topics and requests covered matters including marketing, licensing, compensation, revenue, profits, costs, virtual-reality technology, and Valve’s relationships with third parties. Valve moved for a protective order or to quash the subpoena under Federal Rules of Civil Procedure 26 and 45.

Legal standards

Rule 45 governs subpoenas directed to non-parties and protects a subpoenaed person or entity from undue burden. Rule 26 generally permits discovery of nonprivileged information relevant to a claim or defense, but requires courts to limit discovery that can be obtained from another source more conveniently, with less burden, or at lower expense. The court also may issue a protective order to prevent annoyance, oppression, or undue burden or expense.

Court’s analysis

The court found that ESPI had not established the relevance of many requested deposition topics and document categories to its claims against HTC. It also found that much of the information could have been sought from HTC during party discovery instead of from non-party Valve. The court stated that, if HTC had denied a proper discovery request, the appropriate remedy would have been a motion to compel rather than imposing the expense of that discovery on Valve.

The court found deposition topics 1 through 4 questionable in relevance, obtainable from HTC, and disproportionate to the needs of the case. Topics 5 through 7 were even broader: they sought information about Valve’s business and relationships with vendors and customers without a demonstrated connection to ESPI’s lawsuit against HTC. Requests concerning HTC products other than the accused products were also found irrelevant.

The court reached similar conclusions about the document requests. Request 1 was moot because the related deposition topics were invalid. Requests 2 through 5 overlapped with deposition topics the court had rejected. Request 6 was moot because Valve stated it had not been involved in selling the accused products, and the information could have been obtained from HTC. Requests 7 and 8 likewise sought details about Valve’s business without an indication of relevance to the case.

Disposition

The court held that every item sought by ESPI’s third-party subpoena was either irrelevant to the action or more properly sought from HTC rather than Valve. It therefore granted Valve’s motion to quash ESPI’s subpoena and for a protective order under Rules 45 and 26. The opinion was signed by Robert M. Illman, United States Magistrate Judge.