IBM Corporation v. Micro Focus, Inc.

Background

The parties submitted a joint letter asking the court to decide whether IBM could seek damages for sales of allegedly infringing products outside the United States based on copying that allegedly occurred inside the United States. IBM had also sought discovery from Micro Focus about revenues from sales of the Accused Works in the United States and abroad.

IBM alleged that Micro Focus copied IBM works into the Accused Works in the United States and then sold those works abroad, either directly or through foreign affiliates. IBM’s complaint also alleged that Micro Focus was indirectly liable for infringement by related entities and customers.

Court’s analysis

The court concluded that discovery into foreign sales could be relevant to IBM’s copyright claim. Copyright law generally does not apply outside the United States, but the court explained that the “predicate act” doctrine may allow liability for related foreign infringement when a defendant commits an infringing act in the United States that permits further reproduction abroad. The court also considered related theories of indirect or contributory infringement.

Micro Focus mainly argued that the doctrine did not apply because it had not improperly copied IBM’s material. The court treated that argument as going to the merits of IBM’s claim—the ultimate question of whether IBM would prevail—not to whether IBM was entitled to discovery. Under Federal Rule of Civil Procedure 26(b)(1), parties may obtain nonprivileged information relevant to a claim or defense and proportional to the case’s needs. The court stated that IBM did not have to prove its claim before obtaining discovery that could help prove it, and that discoverable information need not itself be admissible at trial.

Ruling and case status

The court ruled that IBM may seek discovery from Micro Focus sufficient to show revenues from sales of the Accused Works outside the United States. It expressly declined to decide whether IBM is legally entitled to damages for those sales, stating that issue should be addressed on summary judgment or at trial rather than in a discovery dispute.

The court cancelled the discovery conference scheduled for March 7, 2024. It directed the parties to meet and confer and submit a joint status letter by March 13, 2024, explaining whether the requested discovery affects the existing expert-discovery deadlines and, if so, how they propose to proceed. The Clerk of Court was directed to close ECF No. 189.