NimbeLink Corp. v. Digi International Inc.

Background

NimbeLink and Digi each filed a motion to compel discovery. NimbeLink sought financial information related to its alleged damages, additional testimony from Digi under Federal Rule of Civil Procedure 30(b)(6), and documents and emails from former Digi head of sales Matthew Lubeley concerning alleged willful infringement of two NimbeLink patents.

After NimbeLink filed its motion, the District Judge issued a claim-construction order finding the asserted patents invalid, and the parties stipulated to dismiss NimbeLink’s infringement claims. The opinion states that NimbeLink had no remaining active claims, while Digi’s inequitable-conduct counterclaim remained. Because NimbeLink’s requested discovery concerned its infringement claims and damages, the court found it no longer relevant to an active claim and denied NimbeLink’s motion.

Digi sought documents from NimbeLink and NimbeLink’s patent attorney, John Fonder, concerning the ’767 continuation patent application and related potential applications, investor presentations, and Fonder’s billing records for prosecuting the asserted patents. Digi’s requests followed NimbeLink’s intentional waiver of attorney-client privilege and work-product protection concerning prosecution of the asserted patents and preparation and filing of a related provisional application.

Court’s Analysis

The court applied the subject-matter waiver doctrine. Under Federal Rule of Evidence 502(a), an intentional disclosure can extend a privilege waiver to undisclosed communications when they concern the same subject matter and fairness requires considering them together. The court also considered the requirement that discovery be relevant and proportional to the needs of the case.

For documents concerning the ’767 continuation application and related potential applications, the court found that NimbeLink’s waiver extended to communications about prosecuting those applications. The court explained that discussions about whether to disclose prior art to the United States Patent and Trademark Office could potentially support Digi’s inequitable-conduct counterclaim. But the court limited production to documents or communications that might relate or refer to inequitable conduct, prior art or possible prior art, or a decision to omit or disclose such information to the patent office. It found production of every communication about those applications disproportionate.

The court rejected Digi’s argument that NimbeLink had waived privilege over all communications concerning investor presentations. The court found that the record did not show NimbeLink was using some investor communications to support its defense while withholding similar unfavorable communications. It therefore denied Digi’s request for additional investor-presentation documents.

As to Fonder’s billing records, the court found that communications about the amount of fees required for particular work were not privileged. It also found that billing records containing otherwise privileged information about prosecution of the asserted patents fell within NimbeLink’s waiver. The court again applied proportionality and limited production to billing records concerning the asserted patents, the continuation application, or related potential applications, but only insofar as the records might relate or refer to inequitable conduct, prior art or possible prior art, or decisions about disclosing such information to the patent office. The court stated that billing records must be disclosed even if they do not expressly mention prior art when the underlying work may have involved analysis or discussion of prior art.

The court separately denied Digi’s challenge to NimbeLink’s document production because Digi had not shown that it properly met and conferred with NimbeLink about those issues as required by the local rules and the court’s scheduling order.

Order

The court ordered that:

The order was signed by Judge Dulce J. Foster.