IN RE EX PARTE APPLICATION OF QUALCOMM INCORPORATED, Applicant.
Case Nos. 5:16-mc-80002-PSG, 5:16-mc-80003-PSG, 5:16-mc-80004-PSG, 5:16-mc-80005-PSG, 5:16-mc-80006-PSG, 5:16-mc-80007-PSG, 5:16-mc-80008-PSG
United States District Court, Northern District of California
February 18, 2016
PAUL S. GREWAL, United States Magistrate Judge
ORDER DENYING APPLICATIONS FOR LEAVE TO OBTAIN DISCOVERY FOR USE IN FOREIGN PROCEEDINGS (Re: Docket No. 1)
I.
A curious quirk of our law is that American courts are not limited to American disputes. If foreign tribunals and parties to their proceedings need evidence from third parties located in the United States, they may take discovery of such evidence through a court-supervised procedure enacted by Congress. If the third party is willing to turn over the evidence, no problem. United States law “does not preclude a person within the United States from voluntarily giving his testimony or statement, or producing a document or other thing, for use in a proceeding in a foreign or international tribunal before any person and in any manner acceptable to him.”3 But if the third party is not so eager, relief is available from the federal courts in the form of an order authorizing the issuance of a subpoena.4
To that end, Section 1782(a) holds that “[t]he district court of the district in which a person resides or is found may order him to give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or international tribunal, including criminal investigations conducted before formal accusation.” The statute adds that “[t]he order may be made . . . upon the application of any interested person and may direct that the testimony or statement be given, or the document or other thing be produced, before a person appointed by the court.” A further provision adds that “[t]he order may prescribe the practice and procedure, which may be in whole or part the practice and procedure of the foreign country or the international
The KFTC is an administrative agency that enforces compliance with the Republic of Korea’s Monopoly Regulation and Fair Trade Act.5 MRFTA investigations are led by Examiners from the KFTC’s administrative staff and case teams from the KFTC’s Anti-Monopoly Bureau.6 When conducting an investigation, the KFTC is empowered to request production of documents and materials and interview individuals associated with both the target of the investigation or any interested parties.7 Like many of its international counterparts, the KFTC often depends on the cooperation of third parties when investigating alleged antitrust violations.8 To encourage third parties to provide complete submissions and protect their sensitive and confidential information, Article 62 of the MRFTA mandates that third party submissions be kept confidential.9 If a preliminary investigation shows that there is reason to believe that an examinee’s conduct violated the MRFTA, an Examiner’s Report is sent to the KFTC General Counsel’s office and the examinee.10 The General Counsel then dockets the case for hearing before the KFTC Committee, which makes the final ruling on whether there has been an antitrust violation.11
After the Report is issued, the examinee may present a written response and defend itself at
Qualcomm is in the business of selling chips used in mobile phone and other devices that run on cellular networks. Qualcomm also licenses its vast portfolio of cellular-related patents to others who make these phones and other devices. Late last year, KFTC Examiner Gyu-Ha Chai, who serves as Director General of the Anti-Monopoly Bureau, issued an Examiner’s Report against Qualcomm.24 The Report alleges that Qualcomm’s practices regarding standard-essential patent licensing25 violate MRFTA, and recommends that the KFTC impose monetary penalties and order Qualcomm to modify its business practices,26 based on statements and documents either
Qualcomm now applies ex parte under Section 1782 for leave to take discovery from Respondents to prepare its response to the Examiner’s Report and for hearing before the KFTC Committee.30 The discovery Qualcomm seeks includes both a broad set of documents and deposition testimony. Qualcomm’s justification for these demands is straightforward: it needs the documents and testimony to defend its licensing practices before the full KFTC Committee. Five of the Respondents—Apple, Intel, MediaTek, Samsung Entities and Texas Instruments—oppose.31
Significantly, the KFTC itself, as amicus curiae, also opposes Qualcomm’s applications.32 Qualcomm has filed an omnibus reply brief, and the court heard oral argument on February 9, 2016.33
This court has subject matter jurisdiction over Qualcomm’s applications under Section 1782. Although these applications may be sought ex parte under Civ. L.R. 7-10, this court exercised its discretion to allow briefing at this stage by the targets of interest.34
One question—among many—raised by Qualcomm’s applications is who bears the burden of proof on the many issues of fact disputed by the parties. Normally that burden falls on the moving party, but no appellate court to the undersigned’s knowledge has established this explicitly in the specific context of Section 1782 applications. This court need not resolve that question here because, even if the burden on these disputed facts lies entirely with the targets of the proposed subpoenas, those targets have established that the Intel factors collectively weigh against granting the applications.
III.
When considering a Section 1782 application, the court must first determine whether Section 1782’s three statutory requirements are satisfied, and then whether the four factors laid out in Intel support issuing a subpoena. Section 1782 first requires that “the person from whom the discovery is sought resides or is found in the district of the district court to which the application is made.”35 When applied to corporations, the word “found” “‘may safely be regarded as referring to judicial precedents that equate systematic and continuous local activities with presence.’”36 The second requirement is that “the discovery is for use in a proceeding before a foreign tribunal.”37
However, simply because a court has the authority under Section 1782 to grant an application does not mean that it is required to do so.41 In Intel, the Supreme Court identified several factors that a court must take into consideration in ruling on a Section 1782 request, once the statutory requirements are satisfied:
(1) whether the material sought is within the foreign tribunal’s jurisdictional reach and thus accessible absent Section 1782 aid; (2) the nature of the foreign tribunal, the character of the proceedings underway abroad, and the receptivity of the foreign government or the court or agency abroad to U.S. federal-court jurisdictional assistance; (3) whether the Section 1782 request conceals an attempt to circumvent foreign proof-gathering restrictions or other policies of a foreign country or the United States; and (4) whether the subpoena contains unduly intrusive or burdensome requests.42
Applying the above standards, while Qualcomm’s applications satisfy Section 1782’s statutory requirements, the Intel considerations weigh against granting Qualcomm’s requested subpoenas.
First, taking the statutory requirements in order, the first factor is satisfied: all of the Respondents reside or are found in this district. Apple and Intel are headquartered in this district.
The Samsung Entities argue that none of these facts is sufficient to render them found in this district.51 It is true that courts have held that each of these contacts when taken alone may be insufficient to establish a systematic and continuous presence in a district.52 What the Samsung Entities do not address, however, is whether the combined effect of all of these activities and contacts adds up to systematic and continuous local activities in this district. The court finds that it does. After all, the Samsung Entities brought suit against Apple here as plaintiff and counterclaimant, rather than being haled into this forum as a defendant.53 And in contrast to many
Section 1782’s second and third statutory requirements also are satisfied. As to the second requirement, the discovery sought is for use in a proceeding before the KFTC, which is a foreign administrative agency. Intel held that Section 1782 “authorizes, but does not require, a federal district court to provide assistance to a complainant in a European Commission proceeding that leads to a dispositive ruling, i.e., a final administrative action both responsive to the complaint and reviewable in court.”59 Like the European Commission, the KFTC is an administrative agency empowered to render a “final administrative action,” and its rulings are reviewable in court.60 As for the third requirement, the application is made by Qualcomm, which qualifies as an interested
Second, the Intel factors nonetheless collectively weigh against granting Qualcomm’s applications. The first factor, “whether the material sought is within the foreign tribunal’s jurisdictional reach and thus accessible absent Section 1782 aid,”62 is neutral. The Supreme Court has noted that
[w]hen the person from whom discovery is sought is a participant in the foreign proceeding . . . , the need for § 1782(a) aid generally is not as apparent as it ordinarily is when evidence is sought from a nonparticipant in the matter arising abroad. A foreign tribunal has jurisdiction over those appearing before it, and can itself order them to produce evidence. In contrast, nonparticipants in the foreign proceeding may be outside the foreign tribunal’s jurisdictional reach; hence, their evidence, available in the United States, may be unobtainable absent § 1782(a) aid.63
Apple, MediaTek and the Samsung Entities argue that they are participants in the KFTC proceedings because they gave documents and information to the KFTC’s investigatory team.64 Intel argues that it has provided most of the discovery that Qualcomm seeks to the KFTC, and that because it cooperated with the agency’s requests, it is within the KFTC’s reach.65 Texas Instruments makes the related argument that it gave documents and information to the KFTC investigators.66
The issue of whether an entity is a participant, however, is not dispositive; Intel puts it in the context of whether the foreign tribunal has the authority to order an entity to produce the disputed evidence. Other courts have interpreted this to focus on whether the evidence “is available to the foreign tribunal,” because in some circumstances, evidence may be available to a foreign tribunal even if it is held by a non-participant to the tribunal’s proceedings.68 Qualcomm
The second Intel factor, which is “the nature of the foreign tribunal, the character of the proceedings underway abroad, and the receptivity of the foreign government or the court or agency abroad to U.S. federal-court judicial assistance,”70 strongly favors Respondents. Courts conducting this analysis focus on the utility of the evidence sought and whether the foreign tribunal is likely to receive the evidence.71 The KFTC’s amicus brief asks this court “to deny Qualcomm’s applications in their entirety as a matter of comity” and states that “the KFTC has no need or use for the requested discovery.”72 It may be true that the KFTC’s views are not dispositive,73 but the KFTC is clear that it is not at all receptive to U.S. federal-court judicial assistance in this matter.74
Be that as it may, the court must take the amicus brief at face value. While it is true that the brief is signed by Gyu-Ha Chai, the Examiner investigating Qualcomm, there is no indication that it represents his own views and not the KFTC’s as a whole, or that he is speaking only in his capacity as an Examiner and not for the KFTC. The brief is on KFTC letterhead. The first paragraph states that “[t]he Korea Fair Trade Commission (the “KFTC”) respectfully submits this letter,” and the brief repeatedly states the positions of “the KFTC.”78 Qualcomm cites no previous
The third Intel factor, which is whether an applicant seeks “to circumvent foreign proof-gathering restrictions or other policies of a foreign country or the United States,” also favors Respondents. The KFTC states that it has procedures for requesting “copies of documents and data supporting” the Examiner’s Report and that Qualcomm has a pending request for those materials.79 Given that there is an existing procedure in Korea, the KFTC believes that Qualcomm’s Section 1782 applications “seek[] to improperly bypass Korean legal procedures for obtaining documents submitted to the KFTC by third parties.”80 The consequences of allowing Qualcomm to do this would be grave:
[p]ermitting Qualcomm to sidestep Korean legal procedures and obtain these materials directly from the Companies under U.S. law would subvert the KFTC’s power to control when and how confidential investigatory materials are released. Currently, the KFTC can balance Korean policy goals and the privacy and confidentiality rights of third parties against the target of the investigation’s potential need for the information . . . . This balancing would be impossible, however, if the target of an investigation into a potential violation of Korean law could run to the U.S. courts and obtain all materials provided to the KFTC (along [sic] with other materials) by third parties with some connection to the U.S.81
Qualcomm argues that its applications do not circumvent the KFTC’s Case Handling Procedures because it seeks more discovery under its Section 1782 applications than it can obtain
It is true that the KFTC’s existing procedures provide Qualcomm a narrower set of documents than it could discover under U.S. law, and that to a large extent Qualcomm seeks documents not discoverable through the KFTC’s procedures. But Qualcomm’s applications raise additional concerns. According to the KFTC, allowing Qualcomm to do an end run around existing Korean procedures is problematic not just because it colors outside the lines, but because it may discourage third parties from cooperating with future KFTC investigations and hinder the KFTC’s ability to enforce antitrust law. “The KFTC relies heavily on third parties to gain information,” and so “the KFTC and Korean law have measures in place to protect the identities of cooperating companies and the confidentiality of the information they provide.”84 “Exposing the Companies and other third parties to discovery under U.S. law would . . . discourage them from cooperating with the KFTC in future investigations and from reporting anticompetitive conduct to the KFTC.”85 In essence, the KFTC states that it has a system for protecting its investigatory enforcement capabilities, third party interests, and a target’s right to obtain information to defend
The fourth Intel factor, which is “whether the subpoena contains unduly intrusive or burdensome requests,”88 also favors Respondents. Requests are unduly intrusive and burdensome where they are not narrowly tailored, request confidential information and appear to be
From Apple, Qualcomm seeks the following:
- All documents provided by Apple to the KFTC in connection with any investigation or proceeding from January 1, 2011 to the present, concerning “Qualcomm, Mobile Devices, Modem Chipsets, and/or Cellular IPR, and all documents quoted, cited or referenced therein.”91
- Documents from January 1, 2005, to the present, sent by Apple to Qualcomm “sufficient to show any request by Apple to Qualcomm for a license only to Cellular IPR or any response by Qualcomm to such a request.”92
- Documents provided by Apple to Qualcomm “sufficient to show any request by Apple for a list of any Qualcomm IPR or any response by Qualcomm to such a request.”93
- All documents filed or served by Samsung in several cases between Samsung and Apple.94
A deposition related to these topics.95
From Intel, Broadcom, MediaTek, Samsung, Texas Instruments and VIA Technologies, Qualcomm requests the following:
- “All documents You have provided to the KFTC in connection with any investigation or proceeding from January 1, 2011 to the present,” concerning “Qualcomm, Mobile Devices, Modem Chipsets, and/or Cellular IPR, and all documents quoted, cited or referenced therein.”96
- “Documents received by You from January 1, 2005 to the present” from a Modem Chipset customer or potential customer “sufficient to show any concerns on the part of such customer or potential customers regarding Your lack of an exhaustive license from Qualcomm to Cellular IPR.”97
- “Documents from January 1, 2005 to the present sufficient to show any decision by You to limit Your sales or development of Modem Chipsets or any components of a Modem Chipset due to Your lack of an exhaustive license from Qualcomm to Cellular IPR.”98
Depositions related to these topics.99
From Samsung, Qualcomm also requests “[a]ll documents filed or served by” Samsung in or with respect to five different lawsuits.100
Qualcomm’s requests are not narrowly tailored temporally, geographically or in their subject matter. They are not limited to documents or information connected to the KFTC proceedings at issue or to activity in or affecting Korea;101 they cover a span of five to eleven years;102 they include documents that Qualcomm should already have103 or that were served by other parties; and they contain confidential information.104 In particular, many of the documents
Qualcomm argues that its requests are not unduly burdensome or intrusive for several reasons. Most importantly, while production may be burdensome or intrusive, the inquiry is whether it is unduly so in light of the relevance of the information, and these documents are, in Qualcomm’s view, highly relevant.107 It also argues that the Respondents would have collected the responsive documents when assisting the Examiner in his investigation108 and the documents are directly relevant to whether Qualcomm’s licensing practices adversely affected chipset manufacturers’ ability to compete.109 Additionally, with respect to the requests for “documents sufficient to show” customer concerns or whether a Respondent made decisions about Modem Chipset sales and development, Qualcomm believes that those events never occurred, and so the
Qualcomm’s arguments are unpersuasive, however, because when weighed against the relevance of the information sought, the requests are overbroad. It specifically seeks more documents than those that Respondents collected and gave to the Examiner; indeed, one purpose of pursuing discovery under Section 1782 rather than the KFTC’s Case Handling Procedures is that the Procedures give Qualcomm access to a more limited range of material than Section 1782 does. As for the “documents sufficient to show” requests, even if Qualcomm believes that no responsive documents exist, the requests for production and deposition nonetheless require Respondents to search through troves of material spanning over a decade. These requests are not narrowly tailored.
IV.
The Intel factors strongly weigh against granting Qualcomm’s requests for Section 1782 subpoenas. Qualcomm’s applications are DENIED.
SO ORDERED.
Dated: February 18, 2016
PAUL S. GREWAL
United States Magistrate Judge