Dolby Laboratories Licensing Corp. v. ArcSoft, Inc.

Dolby Laboratories Licensing Corp. v. ArcSoft, Inc.

CASE NO. 112CV230794

DATE: 10 July 2014

TIME: 9:00

LINE NUMBER: 8

This matter will be heard by the Honorable Judge Socrates Peter Manoukian in Department 19 in the Old Courthouse, 2nd Floor, 161 North First Street, San Jose. Any party opposing the tentative ruling must call Department 19 at 408.808.6856 and the opposing party no later than 4:00 PM Wednesday 9 July 2014.  Please specify the issue to be contested when calling the Court and counsel.

Should either party contest this tentative ruling, the parties may appear at 10:30 am.

On 10 July 2014, the following 12 motions were argued and submitted:

(1)    The motion of defendant/cross-complainant ArcSoft, Inc. (“ArcSoft”) to compel plaintiff/cross-defendant Dolby Laboratories Licensing Corporation (“Dolby”) to produce further responses to ArcSoft’s second set of special interrogatories (“SI”) and for monetary sanctions;

(2)    ArcSoft’s motion to seal documents in support of the motion to compel further responses to the SI;

(3)    ArcSoft’s motion to seal documents accompanying ArcSoft’s reply brief in support of its motion to compel further responses to the SI;

(4)    ArcSoft’s motion to compel Dolby to produce a person most knowledgeable for a deposition and for monetary sanctions;

(5)    Dolby’s motion for non-monetary sanctions (terminating, evidence, and issue sanctions), contempt, and monetary sanctions;

(6)    ArcSoft’s motion to seal documents in support of the motion to compel Dolby to produce a person most knowledgeable;

(7)    Dolby’s motion to seal documents in support of its opposition to ArcSoft’s motion to compel Dolby to produce a person most knowledgeable;

(8)    Dolby’s motion to seal documents in support of its motion for non-monetary sanctions and contempt;

(9)    ArcSoft’s motion to compel third-party defendant SanDisk Corporation (“SanDisk”) to produce documents that have been clawed back or otherwise withheld on the basis of the attorney-client privilege;

(10)  ArcSoft’s motion to seal documents in support of its motion to compel SanDisk to produce documents withheld on the basis of the attorney-client privilege;

(11)  Dolby’s motion to seal documents in support of its opposition to ArcSoft’s ex parte application for an extension of time to file an opposition to Dolby’s motion for non-monetary sanctions and contempt; and

(12)  ArcSoft’s motion to seal documents in support of its opposition to Dolby’s motion for non-monetary sanctions and contempt.

Dolby filed formal oppositions to the two substantive motions in which ArcSoft seeks relief against Dolby under the Civil Discovery Act—the motion to compel further responses to the SI (the first calendar event) and the motion to compel the production of a person most knowledgeable for a deposition (the fourth calendar event). Dolby did not file an opposition to any of ArcSoft’s motions to seal documents.

ArcSoft filed a formal opposition to Dolby’s motion for non-monetary sanctions and contempt (the fifth calendar event). ArcSoft did not file an opposition to any of Dolby’s motions to seal documents.

SanDisk filed a formal opposition to the fourth and final substantive motion before the Court—ArcSoft’s motion to compel production of documents that SanDisk has withheld on the basis of the attorney-client privilege (the ninth calendar event).

All parties are reminded that all papers must comply with California Rules of Court, rule 3.1110(f).[1]

Statement of Facts

Dolby is responsible for licensing audio and video technology developed by a separate but related entity, Dolby Laboratories Inc., to industry participants. ArcSoft is a software developer of multimedia imaging technologies used in devices such as smartphones, tablets, personal computers, and cameras. ArcSoft is one of Dolby’s licensees.

Beginning in 2004, ArcSoft entered into licensing agreements with Dolby for a variety of technologies used in personal computers. The license agreements require ArcSoft to report all distributions of Dolby’s intellectual property and to pay royalties thereon. According to Dolby, ArcSoft failed to report sales and pay royalties in connection with a number of its customers and has refused to allow Dolby to conduct an inspection of ArcSoft’s records as provided for under the terms of the license agreements.

On 14 February 2012, Dolby instituted this action against ArcSoft, alleging that ArcSoft breached the parties’ licensing agreements. Dolby seeks damages and specific performance of its inspection rights.

ArcSoft filed a cross-complaint against Dolby (in which ArcSoft also names SanDisk—which received products containing Dolby technology from ArcSoft—as a “Third-Party Defendant”), alleging that, subsequent to the signing of the license agreements, Dolby became a direct competitor of ArcSoft and launched an anticompetitive campaign against ArcSoft. In its cross-complaint, ArcSoft contends that Dolby is attempting to misuse the audit provisions contained in the licensing agreements in order to obtain confidential information for uses unrelated to the purpose of those agreements, i.e., to gain an unfair economic advantage over ArcSoft. In March 2013, ArcSoft filed the operative Third Amended Cross-Complaint against Dolby for breach of contract, violations of Business and Professions Code section 17200, intentional interference with contractual relations, intentional interference with prospective economic relations, negligent interference with prospective economic relations, and declaratory judgment.

Discussion

I.             Motions to Seal

Of the twelve motions currently pending before the Court, eight are motions to seal.

ArcSoft has filed five motions to seal. The first motion (which is the second event on the calendar) seeks an order sealing documents in support of ArcSoft’s motion to compel Dolby to provide further responses to SI.[2] The second motion (which is the third event on the calendar) seeks an order sealing documents filed with ArcSoft’s reply brief in support of its motion to compel further responses to the SI.[3] The third motion (which is the sixth event on the calendar) seeks an order sealing documents in support of ArcSoft’s motion to compel Dolby to produce a person most knowledgeable for a deposition.[4] The fourth motion (which is the tenth event on the calendar) seeks an order sealing documents in support of ArcSoft’s motion to compel third-party defendant SanDisk to produce documents withheld on the basis of the attorney-client privilege.[5] The fifth motion (which is the twelfth event on the calendar) seeks an order sealing documents in support of ArcSoft’s opposition to Dolby’s motion for non-monetary sanctions and contempt.[6]

The remaining three motions to seal were filed by Dolby. The first motion (which is the seventh event on the calendar) seeks an order sealing documents in support of Dolby’s opposition to ArcSoft’s motion to compel Dolby to produce a person most knowledgeable for a deposition.[7] The second motion (which is the eighth event on the calendar) seeks an order sealing documents in support of Dolby’s motion for non-monetary sanctions and contempt.[8] The third and final motion to seal (which is the eleventh event on the calendar) seeks an order sealing documents in support of Dolby’s opposition to ArcSoft’s ex parte application for an extension of time to file an opposition to Dolby’s motion for non-monetary sanctions and contempt.[9]

Before moving to the discussion of the law applicable to sealing records in relation to discovery matters, the Court feels it necessary to make a preliminary statement concerning the parties’ use of motions to seal in this case. As discussed below, and as set forth in the previous discovery orders on motions in this case in which the parties have requested documents to be sealed, it is both appropriate and permissible to request the sealing of confidential proprietary information that has been disclosed during discovery and which are subject to the parties’ stipulated protective order. However, in addition to the confidential documents themselves, both parties have adopted the practice of filing heavily redacted versions of their memoranda in support of each of their discovery motions and un-redacted versions of the memoranda under seal.

While this practice is not necessarily impermissible, it does make it somewhat difficult for the Court to review the motions, essentially requiring the Court to review two copies each of the memorandum in support, the opposition, and the reply—not to mention the sealed discovery documents themselves—while attempting to keep in mind what information should and should not be included within the order to protect the parties’ confidential information and at the same time providing sufficient information to put the parties on notice of the reasons for the ruling. If further discovery motions are filed in this case, it would be of assistance to the Court if the parties could draft their memoranda in such a way that would not require the filing of redacted versions of their points and authorities. Having now reviewed several motions filed by both parties in this case, the Court has found that the parties could have used less descriptive language of the protected materials in the memoranda in support of the motions that would have still allowed the Court to assess the arguments and would not have required the filing of redacted versions of the memoranda in support of and in opposition to each motion. This may not be possible for every motion. However, more than one memorandum in support of the motions presently before the Court—and in particular ArcSoft’s memorandum in support of its motion to compel SanDisk to produce documents withheld on the basis of the attorney-client privilege—should not have been redacted.

Turning again to the discussion of the parties’ motions, the memoranda in support of each of the motions to seal are essentially the same. Both parties assert that they have agreed that the discovery activity in this case would likely involve production of confidential, proprietary, or private information for which special protection from public disclosure would be required. Along these lines, the parties executed a stipulated protective order, which was approved by Judge Lucas on 10 January 2013. Paragraph 12.3 of the stipulated protective order, entitled “Filing of Protected Material,” provides as follows:

Any documents containing Protected Material that a Party wishes to loge or file with the Court in connection with discovery motions or proceedings, and all pleadings and memoranda purporting to reproduce or paraphrase such Protected Material, shall be lodged or filed in sealed envelopes . . . which shall bear the word “Confidential” and a statement substantially in the following form:

Lodged under seal for discovery motion/proceedings pursuant to Order of the Court, contains Confidential Information and is not to be opened or the contents revealed, except by Order of the Court or agreement of the parties to this action.

(Mot. to Seal, filed 28 April 2014, Ex. 2; Mot. to Seal, filed 30 May 2014, Ex. 2.)

The parties now ask the Court to seal some of the documents submitted in support of the four substantive motions presently before the Court pursuant to the parties’ protective order and California Rules of Court, rules 2.550 through 2.585.

               A.           Relevant Law

A party may not file a record under seal without a court order. (Cal. Rules of Court, rule 2.551(a).) A court may not permit a record to be filed under seal based solely on the agreement or stipulation of the parties. (Id.) California Rules of Court, rule 2.551(b) requires that the party seeking to file documents under seal must file a motion that contains a notice of motion, memorandum of points and authorities, and a declaration containing facts sufficient to justify the sealing. A court has the authority to order that a record be filed under seal only if it expressly finds facts that establish (1) there exists an overriding interest that overcomes the right of public access to the record; (2) the overriding interest supports sealing the record; (3) a substantial probability exists that the overriding interest will be prejudiced if the record is not sealed; (4) the proposed sealing is narrowly tailored; and (5) no less restrictive means exist to achieve the overriding interest. (Cal. Rules of Court, rule 2.551(d).)

“Courts have found that, under appropriate circumstances, various statutory privileges, trade secrets, and privacy interests, when properly asserted and not waived, may constitute overriding interests.” (In re Providian Credit Card Cases (2002) 96 Cal.App.4th 292, 298 n.3; see also NBC Subsidiary (KNBC-TV), Inc. v. Sup. Ct. (1999) 20 Cal.4th 1178, 1222 n.46 [overriding interests found in various cases include, inter alia, protection of trade secrets, protection of information within the attorney-client privilege, and enforcement of binding contractual obligations not to disclose]; Code Civ. Proc. [“CCP”], § 3426.5 [“In an action under this title, a court shall preserve the secrecy of an alleged trade secret by reasonable means, which may include granting protective orders in connection with discovery proceedings, holding in-camera hearings, sealing the records of the action, and ordering any person involved in the litigation not to disclose an alleged trade secret without prior court approval.”].)

The California Rules of Court expressly indicate that the sealing rules do not apply to discovery motions, or records filed and lodged in connection with discovery motions. (Cal. Rules of Court, rule 2.550(a)(3).) The rules do apply to discovery materials that are used at trial or submitted as a basis for adjudication of matters other than discovery proceedings. (Id.) However, the Sixth Appellate District, in dicta, has interpreted the discovery exemption contained in the California Rules of Court as not precluding all discovery motions from the sealing requirements, but imposing a less strict set of requirements than those in the rules of court. (H.B. Fuller Co. v. Doe (2007) 151 Cal.App.4th 879, 891-894 (“Fuller”).) The plaintiff in Fuller asserted that the rules of court did not apply, because the motion at issue was a discovery proceeding and was expressly exempted. (Id. at p. 892.) The court addressed the dangers of applying a categorical exemption of the sealing rules to all discovery motions. The court found it “absurd” to require “the moving party to expose the materials to public view, or to prove that there is an overriding interest against their disclosure” for routine discovery motions involving the “quintessentially procedural question of whether and under what conditions the materials must be produced in discovery.” (Id. at p. 893.) The court found that the strict sealing rules were more appropriate for discovery motions that were “not merely ancillary or preliminary to some larger litigation, but [are] the whole end and purpose of the case,” and that involved questions of great significance to the public. (Ibid.) The Fuller court ultimately did not decide the discovery exemption issue because the court found no substantial basis for maintaining the documents at issue under seal. (Id. at p. 894.)

               B.           Analysis

Both parties contend that the documents sought to be sealed contain confidential information, including the parties’ trade secret information. Based upon the confidential nature of the information, the parties assert that they have an overriding interest in protecting this information and that the interest outweighs the right of public access to these records. They also argue that they have an overriding interest in honoring the stipulated protective order. The Court agrees with both of these propositions. (See McGuan v. Endovascular Technologies, Inc. (2010) 182 Cal.App.4th 974, 988 [protection of trade secrets is an interest that can support sealing records in a civil proceeding]; see also, Fuller, supra, 151 Cal.App.4th at pp. 892-893 [noting interest in honoring protective orders].)

Having reviewed the documents conditionally lodged under seal, the Court finds that the parties have minimally complied with the requirements of the sealing rules. The Court further finds that the documents at issue contain confidential information, including trade secret information. The parties have an overriding interest in the non-disclosure of this information. Similarly, the Court finds that a substantial probability exists that the overriding interest will be prejudiced if the documents are not sealed. The Court also finds that the parties have an overriding interest in honoring their protective order. As the court of appeal stated in Fuller:

The discovery process, which is intended to be largely self-enforcing, would be greatly impeded if every document a party might produce was ipso facto open to public inspection. Records now freely disclosed under protective orders, often entered by stipulation, would require laborious collateral litigation to establish grounds for a sealing order. This would impose a substantial new burden on parties as well as on the courts, all in derogation of a process that is largely a modern invention and has never been conceived as open to the public.  (Fuller, supra, 151 Cal.App.4th at pp. 892-893.)

Based upon the above discussion, both parties’ motions to seal (event numbers two, three, six, seven, eight, ten, eleven, and twelve on the calendar) are GRANTED.

II.            ArcSoft’s Motion to Compel Further Responses to SI

               A.           Facts Giving Rise to the Motion

On 7 February 2014, ArcSoft served Dolby with its second set of special interrogatories (“SI”). The set contained a total of 19 interrogatories (SI Nos. 80-98), which seek, among other things, communications between Dolby and persons from one of ArcSoft’s competitors, information related to ArcSoft’s customers, and information concerning Dolby’s industry group licensing obligations.

On 10 March 2014, Dolby served ArcSoft with verified responses to the SI, consisting of objection-only responses to some of the interrogatories and hybrid responses to the remainder—objections followed by a substantive response.

On 17 April 2014, counsel for ArcSoft sent a meet and confer letter to counsel for Dolby. (Decl. of Anne-Marie Dao In Support of ArcSoft’s Mot. to Compel Further Responses (“Decl. of Dao”), Ex. 3.) In the letter, counsel for ArcSoft addressed perceived deficiencies with 17 of the 19 interrogatories.

On 22 April 2014, counsel for the parties engaged in a meet and confer conference call and, on 23 April 2014, counsel for Dolby sent a letter to counsel for ArcSoft. (Decl. of Dao, ¶¶ 7 and 8.) In the letter, counsel for Dolby indicated that Dolby would provide ArcSoft with supplemental responses to several of the interrogatories. (Id., Ex. 4.) Counsel further indicated that Dolby intended to stand on its responses to two of the interrogatories and that, if ArcSoft remained unsatisfied with the responses, it would “have to move to compel if [it] want[s] further responses.” (Id.) Counsel for Dolby ended the letter by stating that “we are not willing to grant you an extension on time within which to move to compel . . . .” (Id.)

On 28 April 2014, without waiting to receive Dolby’s supplemental responses, ArcSoft filed the motion to compel further responses presently before the Court. Through the motion, ArcSoft asks the Court to compel further responses to 17 of the 19 interrogatories.

On 23 May 2014, Dolby filed an opposition to the motion. ArcSoft filed its reply on 30 May 2014.

               B.           Legal Standard

After receiving responses to interrogatories, the propounding party may move for an order compelling further responses if the propounding party deems that any of the following apply:

(1)  An answer to a particular interrogatory is evasive or incomplete.

(2)  An exercise of the option to produce documents is unwarranted or the required specification of those documents is inadequate.

(3)  An objection to an interrogatory is without merit or too general.

(CCP, § 2030.300, subd. (a)(1) – (3).) If a timely motion to compel has been filed, the burden is on the responding party to justify any objection. (See Fairmont Ins. Co. v. Sup. Ct. (2000) 22 Cal.4th 245, 255, citing Coy v. Sup. Ct. (1962) 58 Cal.2d 210, 220-221.)

               C.           Analysis

ArcSoft seeks further responses to SI Nos. 80, 82-93, and 95-98.[10] ArcSoft contends that Dolby’s objections to the SI lack merit and that Dolby’s substantive responses are incomplete and evasive.

The interrogatories at issue seek information falling into five categories. The first category (SI No. 80) relates to communications between Dolby and persons from one of ArcSoft’s direct competitors. The second category (SI Nos. 82-84 and 88-92) seeks information concerning ArcSoft’s customers, including the identity of customers that sold products relevant to Dolby’s claims, contracts between Dolby and the customers, royalty and license payments received by Dolby from ArcSoft customers, and any legal actions threatened or actually filed by Dolby against ArcSoft customers. The third category (SI Nos. 85-87) concerns Dolby’s claims with regard to mobile phone technology. The fourth category (SI Nos. 93 and 95) concerns a specific device and when Dolby became aware that the device may contain certain technology. The fifth category (SI Nos. 96-98) relates to Dolby’s industry group licensing obligations (RAND/FRAND obligations). Each of these categories is discussed below.

                              1.            SI No. 80

SI No. 80 seeks the names and contact information of persons affiliated with one of ArcSoft’s direct competitors that Dolby had communications with during a specified time period.

Dolby objected to SI No. 80 on the grounds that the interrogatory is burdensome and oppressive, overly broad, vague and ambiguous, and seeks irrelevant information. Dolby also objected on the ground that the Court previously denied ArcSoft’s request to compel discovery related to the competitor.

In its opposition and separate statement, Dolby only attempts to justify its objection based upon the Court’s previous orders denying discovery related to the competitor. The remaining objections are therefore overruled.

In support of its argument that Dolby was justified in refusing to provide a substantive response to SI No. 80, Dolby relies upon the orders entered by the Court on 24 October 2012 (the “October 2012 Order”) and 3 May 2013 (the “May 2013 Order”).

In the October 2012 Order, the Court denied ArcSoft’s motion to compel further responses to requests for production of documents. The requests at issue sought, among other things, information related to the same competitor that ArcSoft now seeks information about through SI No. 80. The Court held that “good cause has not been shown justifying discovery as to those requests.” (Order dated 24 October 2012.)

The May 2013 Order relates to a motion to quash. ArcSoft had served the competitor at issue with a third party business records subpoena. Dolby moved to quash the subpoena, and the Court granted the motion. The Court found that “ArcSoft has not set forth specific facts showing that the discovery is justified.” (Order dated 3 May 2013, attached to Decl. of Dao, Ex. 5.) The Court further stated that, “while ArcSoft argues in a conclusory manner that the discovery is justified in light of the causes of action in the [Third Amended Cross-Complaint], no facts are provided demonstrated as much . . . and ‘the justifications offered for the production are mere generalities.’” (Id., at pp. 3-4, quoting Calcor Space Facility, Inc. v. Sup. Ct. (1997) 53 Cal.App.4th 216, 224.)

Dolby contends that “[n]othing has changed since the last two times this Court correctly found that ArcSoft had not set forth specific facts showing that discovery regarding [the competitor] is justified” and that “Dolby rightfully refused to respond to [SI] No. 80 because ArcSoft has failed to establish good cause and facts sufficient to justify the discovery sought.” (Dolby’s Separate Statement, pp. 4, 6.)

Dolby’s argument is not well-taken. Contrary to the assertion that nothing has changed since previous two orders, something has changed. Namely, ArcSoft has resorted to a different discovery device to obtain the information. The difference is significant.

The previous two orders dealt with the production of documents through inspection demands and a business records subpoena. In both instances, as the Court stated in its orders on the motions, the initial burden was on ArcSoft to demonstrate good cause for the discovery. (See CCP, § 2031.310, subd. (b)(1) [A motion to compel further responses to inspection demands “shall set forth specific facts showing good cause justifying the discovery sought by the demand.”].) In other words, the burden rested with ArcSoft to show both the relevance of the documents to the subject matter of the case (e.g., how the information in the documents would tend to prove or disprove some issue in the case) and specific facts justifying the discovery (e.g., why such information is necessary for trial preparation or to prevent surprise at trial) before the burden shifted to Dolby to justify its objections. (See Glendfed Develop. Corp. v. Sup. Ct. (1997) 53 Cal.4th 1113, 1117.)

The present matter, however, deals with interrogatories, for which there is no statutory requirement that the moving party make a preliminary showing of good cause. For interrogatories, if a timely motion to compel has been filed, the burden rests with the responding party to justify any objection. (See Fairmont Ins. Co. v. Sup. Ct. (2000) 22 Cal.4th 245, 255.) In other words, unlike the procedural framework applicable to motions to compel further responses to document requests, in which the moving party is statutorily required to demonstrate good cause prior to the responding party justifying its objections, there is no good cause requirement for motions to compel further responses to interrogatories.

Dolby was, of course, free to object to SI No. 80 on the basis of relevance, which it did. Dolby has not, however, attempted to justify its relevance objection. Moreover, even if the Court was to construe Dolby’s good cause argument as an attempt to justify its relevance objection, the objection would be overruled. It is well-settled that, in the discovery context, relevance is to be construed liberally in favor or disclosure (see Emerson Electric Co. v. Sup. Ct. (1997) 16 Cal.4th 1101, 1107), and the standard is “relevancy to the subject matter” of the action, which case law makes clear is “a broader concept than ‘relevancy to the issues.’” (Pac. Tel. and Tel. Co. v. Sup. Ct. (1970) 2 Cal.3d 161, 172, quoting Chronicle Publishing Co. v. Sup. Ct. (1960) 54 Cal.2d 548, 560.) ArcSoft alleges that the competitor at issue received preferential treatment from Dolby as part of its claim that Dolby violated the Business and Professions Code. The identity of who Dolby spoke with at the competitor company may lead to witnesses who have information that support ArcSoft’s allegations. The information sought by SI No. 80 is therefore relevant.

Based upon the above discussion, ArcSoft’s motion to compel a further response to SI No. 80 is GRANTED.

                              2.            SI Nos. 82-84 and 88-92

SI Nos. 82-84 and 88-92 seek information concerning ArcSoft’s customers. Specifically, the interrogatories ask Dolby to identify any ArcSoft customers that sold products at issue in this case, any contracts between Dolby and the customers, any royalty and license payments received by Dolby from ArcSoft customers, and any legal actions threatened or actually filed by Dolby against ArcSoft customers.

Dolby objected to all of the interrogatories within this category on the ground that the interrogatories exceed the number of special interrogatories permitted by the Code, rendering the requests burdensome and oppressive. Dolby also raised objections on the grounds of overbreadth, the attorney-client privilege, the attorney work product doctrine, relevance, the information is already in ArcSoft’s possession, and the terms within the interrogatories are vague and ambiguous. Without waiving its objections, Dolby also provided substantive responses to SI Nos. 83, 84, and 89-92.

As an initial matter, Dolby indicates that it will provide supplemental responses to SI Nos. 83, 84, 88, and 90. Thus, because Dolby concedes that further responses are warranted, the objections to these requests are overruled with the exception of the attorney-client privilege and attorney work product objections, which are preserved. (Best Products, Inc. v. Sup. Ct. (2004) 119 Cal.App.4th 1181, 1188-1189 [holding that where a defendant asserted the attorney-client and work product privileges in a timely manner, albeit in a boilerplate fashion, the trial court erred in finding a waiver of the privileges].) Accordingly, ArcSoft’s motion to compel further responses to these SI is GRANTED.

Turning to the SI in this category that Dolby has not agreed to supplement, Dolby does not attempt to justify its objections to any of the interrogatories, arguing instead that its substantive responses are sufficient. Because Dolby has not attempted to justify its objections, the objections are overruled with the exception of the attorney-client privilege and the work product doctrine, which are preserved. (Best Products, Inc., supra, 119 Cal.App.4th at pp. 1188-1189.)

SI No. 82 asks Dolby to provide certain information concerning each ArcSoft customer identified in the response to SI No. 81. Dolby responded as follows: “Dolby incorporates its objections and response to Interrogatory 81 as though fully set forth herein.” (Dolby’s Separate Statement, p. 8.) ArcSoft argues that this response is inadequate. The Court agrees.

Code of Civil Procedure section 2030.220 requires responses to interrogatories to be “as complete and straightforward as the information reasonably available to the responding party permits.” (CCP, § 2030.220, subd. (a).) The response to SI No. 81, which is incorporated by reference as the response to SI No. 82, sets forth what Dolby is claiming in this case. It does not refer to any specific customer. Because the response to SI No. 81 does not identify any customers, it is necessarily non-responsive to SI No. 82. Dolby claims that it does not know the identity of the customers because, in breach of the parties’ contractual obligations, ArcSoft failed to report them or allow Dolby to conduct an audit. Dolby’s assertion may very well be true, but it does not remedy the problems with the discovery response. If Dolby does not have the names of customers, making it impossible to respond to SI No. 82, then it is required to say so in a verified response. As it stands, the response is not “as complete and straightforward as the information reasonably available to the responding party permits.” (CCP, § 2030.220, subd. (a).) ArcSoft’s motion to compel a further response to SI No. 82 is therefore GRANTED.

SI No. 89 asks Dolby to provide “specific dates, by month and year” for information related to ArcSoft customers. In its substantive response, Dolby refers ArcSoft to several documents produced in response to ArcSoft’s Request for production of documents.

ArcSoft argues that the response is inadequate because the interrogatory simply calls for certain dates by month and year, and Dolby failed to provide that information. The Court agrees. Where the interrogatory is specific and explicit, a response that fails to answer the specific question or only supplies a portion of the information sought is improper. (Deyo v. Kilbourne (1978) 84 Cal.App.3d 771, 783.) Similarly, because each answer should, by itself, fully answer each interrogatory, the reference to other interrogatories does not constitute a code-compliant response. (Id., at pp. 783-784.) Because Dolby failed to answer the question being asked in the interrogatory, the response is not code-compliant. ArcSoft’s motion to compel a further response to SI No. 89 is therefore GRANTED.

SI No. 91 asks whether Dolby has “sued, threatened to sue, and/or made a demand for payment against any ARCSOFT CUSTOMER . . . .” (Dolby’s Separate Statement, p. 29-30.) If Dolby responded in the affirmative, SI No. 92 seeks further information. In response, Dolby indicates that it has not sued any ArcSoft customer. Given this response, Dolby contends that SI No. 92 became inapplicable.

ArcSoft contends that the substantive response is incomplete. The Court agrees. SI No. 91 asks for more information than simply whether Dolby has sued an ArcSoft customer. The failure to provide a response to the questions of whether Dolby has “threatened to sue” or “made a demand for payment” against any customer renders the response to SI No. 91 incomplete and non-code-compliant. Similarly, because the response to SI No. 91 is incomplete, the response to SI No. 92 is also inadequate. Accordingly, ArcSoft’s motion to compel further responses to SI Nos. 91 and 92 is GRANTED.

                              3.            SI Nos. 85-87

SI Nos. 85-87 concern Dolby’s claims regarding mobile phone technology. Specifically, SI No. 85 asks whether Dolby is making a certain contention regarding mobile phone technology. SI Nos. 86 and 87 then ask Dolby to provide all facts supporting its response to SI No. 85 depending upon whether Dolby’s response to SI No. 85 is “yes” or “no.”

Regarding SI No. 85, Dolby objected to the request on several grounds and provided a substantive response. ArcSoft argues that the objections lack merit and that the substantive response is non-responsive.

Dolby does not attempt to justify its objections to SI No. 85. The objections are therefore overruled.

Dolby does contend, however, that, even though it did not provide a “yes” or “no” answer to SI No. 85, its substantive response is nevertheless fully responsive. The Court agrees. Without going into the specifics of the response, which has been lodged under seal, the Court finds that the response provides a complete answer to the contention interrogatory. In other words, although the response is not a simple “yes” or “no,” it is clear from the response whether or not Dolby is making the contention at issue. ArcSoft’s motion to compel a further response is therefore DENIED.

Dolby provided the following response to both SI Nos. 86 and 87: “Dolby incorporates its objections and response to interrogatory 85 as though fully set forth herein.” (Dolby’s Separate Statement, pp. 19-20.) ArcSoft claims that the responses to SI Nos. 86 and 87 are inadequate. The Court agrees.

Dolby does not attempt to justify its objections to SI Nos. 86 and 87, which are incorporated from the response to SI No. 85. The objections are therefore overruled. Concerning its substantive responses, Dolby essentially asserts that no facts exist supporting the contention because it is impossible to prove a negative. Dolby may very well be correct, but if no facts exist support the claim, then Dolby is required to say so in a verified response. (See CCP, 2030.220, subd. (b) and (c).) The failure to do so renders the responses non-code-compliant. Accordingly, ArcSoft’s motion to compel further responses to SI Nos. 86 and 87 is GRANTED.

                              4.            SI Nos. 93 and 95

SI Nos. 93 and 95 seek information concerning a specific device and the date that Dolby first became aware that the device may contain certain technology.

Dolby objected to the interrogatories on several grounds, which it does not attempt to justify in its opposition, and provided substantive responses. ArcSoft takes issue with both the objections and the substantive responses.

Because Dolby does not attempt to justify its objections to the interrogatories, the objections are overruled.

Concerning the substantive responses, Dolby indicates that it will provide supplemental responses. Dolby has set forth what its supplemental responses will be in its separate statement and they appear to fully respond to the requests. While Dolby claims that its initial responses were proper, given Dolby’s agreement to provide supplemental responses, ArcSoft’s motion to compel further responses is GRANTED.

                              5.            SI Nos. 96-98

SI Nos. 96-98 relate to Dolby’s industry group licensing obligations. Specifically, SI No. 96 asks whether Dolby is “a Fair Reasonable And Non Discriminatory (“FRAND”) or Reasonable And Non Discriminatory (“RAND”) licensor?” SI No. 97 asks Dolby to set forth the facts supporting its response to SI No. 96, and SI No. 98 asks Dolby to describe its obligations.

The phrase “reasonable and on-discriminatory terms” or RAND—also known as “fair, reasonable, and non-discriminatory terms” or FRAND—are licensing obligations required by industry groups that set standards for certain industries to insure compatibility and interoperability of devices manufactured by different companies. (See Layne-Farrar, et al., Pricing Patents for Licensing in Standard-Setting Organizations: Making Sense of FRAND Commitments (2007) 74 Antitrust L.J. 671.) Standard-setting organizations (“SSOs”) include these obligations in their bylaws as a means of enhancing the pro-competitive character of their industry. (Id.) They are intended to prevent members from engaging in licensing abuse based on the monopolistic advantage generated as a result of having their intellectual property rights included in the industry standards. (Id.) Once an organization is offering a FRAND license, they are required to offer that license to anyone, not necessarily members of the group. (Id.)

Dolby provided a hybrid response to SI No. 96, raising objections and, without waiving those objections, providing a substantive response. Dolby objected on the following grounds: the interrogatory exceeds the number of SI authorized by the Code and is therefore burdensome and oppressive; overbreadth; undue burden; calls for a legal conclusion; attorney-client privilege; work product doctrine; vagueness and ambiguity; and the information concerning contractual obligations required by SSOs are public information. Dolby incorporated these objections in its responses to SI Nos. 97 and 98.

Concerning its substantive response to SI No. 96, Dolby indicated that it “has certain patents” “in certain market segments and geographies and at various times” and that it is contractually committed to certain SSOs to offer licenses on the patents on fair, reasonable and non-discriminatory or reasonable and non-discriminatory terms. (Dolby’s Separate Statement, p. 39.) Dolby further indicated that “[t]hose obligations vary from SSO to SSO, and even within a single SSO in different times, and the pulbically [sic] available obligations speak for themselves.” (Id.)

Dolby responded to SI No. 97 and 98 as follows: “Dolby incorporates its objections and response to interrogatory 96 as though fully set forth herein.” (Id., at pp. 41, 43.)

ArcSoft contends that Dolby’s objections lack merit and that its substantive responses are inadequate. The Court disagrees.

In its opposition, Dolby only attempts to justify its relevance and overbreadth objections, both of which are related. The remaining objections are therefore overruled, with the exception of the attorney-client privilege and work product doctrine, which are preserved. (Best Products, Inc., supra, 119 Cal.App.4th at pp. 1188-1189.)

Concerning its relevance and overbreadth objections, Dolby points out that there are hundreds if not thousands of standards set for various forms of technology. Dolby further points out, and it appears undisputed, that this case only involves a couple technologies and that, as worded, SI Nos. 96-98 are not limited to those technologies. Based upon these assertions, Dolby claims that the interrogatories are overly broad in that they encompass standards related to technologies that are wholly unrelated to this case. The Court agrees, and the relevance and overbreadth objections are therefore sustained. The Court further finds that Dolby’s substantive response to SI No. 96 fully and adequately responds to the interrogatory notwithstanding the argument by ArcSoft that the interrogatory called for a “yes” or “no” answer.

Because Dolby has justified its relevance and over breadth objections to SI Nos. 96-98 and provided a complete and adequate response to SI No. 96, ArcSoft’s motion to compel further responses to these interrogatories is DENIED.

               D.           ArcSoft’s Request for Monetary Sanctions

ArcSoft requests monetary sanctions against Dolby in the amount of $10,087.50 on two grounds. First, ArcSoft asserts that Dolby provided inadequate responses and made unmeritorious boilerplate objections to the SI without substantial justification which, under Code of Civil Procedure section 2023.010, constitute misuses of the discovery process. Second, ArcSoft asserts that sanctions are warranted for Dolby’s failure to meet and confer.

As an initial matter, ArcSoft does not cite the statutory provision authorizing sanctions for a party’s failure to meet and confer. Moreover, section 2023.010 does not authorize an award of sanctions. Rather, the provision provides a list of actions that constitute misuses of the discovery process. (CCP, § 2023.010, subd. (a) – (i).) Section 2023.030, which ArcSoft does not cite, authorizes an award of sanctions for the misuse of the discovery process, but only “[t]o the extent authorized by the chapter governing any particular discovery method.” (CCP, § 2023.030, subd. (a).) In other words, to invoke section 2023.030 as a basis for sanctions, the moving party must first be authorized to seek sanctions under the provisions in the Civil Discovery Act applicable to the discovery requests at issue. In this case, the applicable provisions are sections 2030.300, subdivision (d), which authorizes sanctions in connection with motions to compel further responses to interrogatories, and 2023.020, which authorizes an award of sanctions, regardless of the outcome of the motion to compel, where a party or his or her attorney fails to meet and confer.

Section 2023.040 requires a notice of motion for sanctions to be supported by a memorandum of points and authorities. Pursuant to the California Rules of Court, such memoranda “must contain” “a concise statement of the law . . . and a discussion of the statutes . . . cited in support of the position advanced.” (Cal. Rules of Court, rule 3.1113(b).) The failure to provide the court with the legal basis for the requested relief is grounds for denying a motion. (Quantum Cooking Concepts, Inc. v. LV Assocs., Inc. (2011) 197 Cal.App.4th 927, 934 [indicating that court may deny motion not accompanied by a memorandum setting forth the legal basis for the relief requested].) Because ArcSoft failed to cite the statutory authority authorizing sanctions, the Court will deny the request on that basis.

However, even if ArcSoft’s request for monetary sanctions was not procedurally deficient, the request would nonetheless be denied. First, because ArcSoft’s motion is granted in part and denied in part, the Court finds that Dolby acted with substantial justification in opposing the motion. (CCP, § 2030.300, subd. (d) [providing that the court need not award sanctions if the party subject to sanctions acted with substantial justification].) Second, ArcSoft’s assertion that Dolby failed to meet and confer is not supported by the record. As the moving party, it is ArcSoft’s statutory obligation to demonstrate that counsel for the parties met and conferred prior to the motion being filed. (CCP, § 2030.300, subd. (b).) The record reflects, however, that ArcSoft did not initiate the meet and confer process until a week before the motion to compel was due. Moreover, Dolby was certainly within its right to refuse to grant an extension for the motion to compel given its appropriate desire to ensure that the trial in this case is not delayed.

ArcSoft suggests that, given Dolby’s refusal to grant an extension to file its motion, ArcSoft had no choice but to file the motion when it did. That argument is not well-taken. As Dolby points out, it informed ArcSoft that it would supplement all but two of its responses, which would have reset the 45-day time limit within which ArcSoft could file its motion. (See CCP, § 2030.300, subd. (c) [“Unless notice of this motion is given within 45 days of the service of the verified response, or any supplemental verified response . . . the propounding party waives any right to compel a further response to the interrogatories.”].)

Based upon the above discussion, ArcSoft’s request for monetary sanctions is DENIED.

III.           ArcSoft’s Motion to Compel Dolby to Produce a Person Most Knowledgeable for a Deposition

               A.           Facts Giving Rise to the Motion

On 7 February 2014, ArcSoft served Dolby with a deposition notice under Code of Civil Procedure section 2025.230, requesting that Dolby designate and produce a person most knowledgeable (“PMK”) for a deposition on 30 topics listed in the notice. The notice designated 24 February 2014 as the date for Dolby to produce its PMK for a deposition.

The topics listed in the deposition notice included the following: business dealings between Dolby and its customers; the specific Dolby technology licensed to its customers; Dolby’s method of identifying the use of its technology in the marketplace; Dolby’s enforcement of its license agreements (including any audits) concerning Dolby’s own customers; information concerning Dolby’s FRAND obligations; negotiations and interactions between SanDisk and Dolby related to money owed by SanDisk to Dolby; the Sansa Media Converter; settlement agreements between SanDisk and Dolby; Dolby’s efforts to enter the mobile phone market; and Dolby’s calculation of license fees allegedly owed by ArcSoft to Dolby.

On 21 February 2014, Dolby served ArcSoft with a formal response to the deposition notice, objecting to each of the 30 topics of inquiry and expressly refusing to produce a PMK with regard to 16 of the topics. (Dao Decl. in Support of Mot. to Compel PMK Depo., Ex. 2.)

On 7 April 2014, counsel for the parties conducted a conference call concerning the PMK deposition notice and, on 25 April 2014, counsel for ArcSoft sent counsel for Dolby a meet and confer letter summarizing the conference call and indicating that ArcSoft had re-worded some of the topics based upon Dolby’s objections and concerns raised during the telephonic conference. (Dao Decl., Ex. 3.)

On 5 May 2014, counsel for Dolby responded to ArcSoft’s counsel’s letter, indicating that it would not produce a witness for 17 of the 30 topics either because Dolby will produce a chart covering the topic or because Dolby believed the topic to be irrelevant. (Dao Decl., Ex. 4.) Counsel for Dolby further indicated that it might produce a witness as to the remainder of the topics if the language of the topics is narrowed. (Id.)

On 13 May 2014, counsel for ArcSoft sent counsel for Dolby another meet and confer letter, indicating that motion practice would be necessary to resolve the parties’ dispute.

On 20 May 2014, counsel for Dolby sent counsel for ArcSoft a meet and confer letter. In the letter, counsel for Dolby stated as follows:

. . . . You wrote us a letter stating that we only agreed to produce a witness on one topic and that you were going to move to cmpel on the balance. We responded that we have agreed to do much more than that and that your motion is premature, and you react by accusing us of trying to avoid providing substantive discovery. . . .

. . . . ArcSoft’s position throughout the process . . . is that Dolby either agrees to ArcSoft’s topics exactly as written, or else face a motion to compel. As stated previously, this renders any meet and confer process meaningless. Nevertheless, Dolby yet again offers the following responses in hopes to avoid what seems to be inevitable motion practice by ArcSoft. (Id., Ex. 8.)

Counsel for Dolby then went on to suggest how some of the topics that Dolby did not find completely irrelevant could be re-worded. (Id.) For instance, concerning two of the topics that Dolby found objectionable, counsel for Dolby wrote as follows:

With respect to Topic Nos. 25 and 26, Dolby stands by its objections and will not produce a witness on these topics. Again, ArcSoft has failed to show good cause and specific facts justifying this extremely broad discovery regarding “Dolby’s efforts to have Dolby technology utilized in the mobile phone market” or “Dolby’s efforts to license or otherwise have Original Equipment Manufacturers use Dolby technology in the mobile phone market, in any manner.” Not only are these issues irrelevant, but they are so vague and overbroad that it is not possible to prepare a witness to testify about them. (Id.)

On 29 May 2014, given Dolby’s refusal to produce a PMK on several of the topics listed in the deposition notice and insistence on re-wording several of the topics, ArcSoft filed a motion to compel Dolby to produce a PMK for deposition in accordance with the deposition notice.

Dolby filed its opposition to the motion on 27 June 2014. ArcSoft filed a reply on 3 July 2014.

               B.           Statutory Basis for Motion

ArcSoft seeks relief under Code of Civil Procedure section 2025.450, which authorizes motions to compel compliance with a deposition notice. More specifically, the section provides, in pertinent part, as follows:

If, after service of a deposition notice, a party to the action or . . . a person designated by an organization that is a party under Section 2025.230 [governing notices for PMK depositions], without having served a valid objection under Section 2025.410, fails to appear for examination, or to proceed with it, or to produce for inspection any document . . . described in the deposition notice, the party giving the notice may move for an order compelling the deponent’s attendance and testimony, and the production for inspection of any document . . . described in the deposition notice. (CCP, § 2025.450, subd. (a).)

If the party moving under section 2025.450 seeks the production of documents, the motion must “set forth specific facts showing good cause justifying the production.” (CCP, § 2025.450, subd. (b)(1).) There is no good cause requirement if the moving party is only seeking to compel the production of the witness to provide testimony. Thus, as to a motion seeking an order compelling attendance, the moving party need only show that it served the responding party with the deposition notice and that the party failed to appear without making a valid objection.

               C.           Analysis

ArcSoft seeks an order compelling Dolby to designate and produce a PMK for a deposition in accordance with the deposition notice served on 7 February 2014. ArcSoft argues that Dolby’s objections to the topics listed in the deposition notice lack merit. Both parties’ arguments focus almost exclusively on whether the topics are relevant. For the reasons set forth below, the question of whether the topics are relevant has no bearing on the Court’s analysis of the motion.

As indicated above, under Code of Civil Procedure section 2025.450, subdivision (a), a party may only move for an order compelling compliance with a deposition notice it the party or deponent failing to appear for the deposition has not served a valid objection under section 2025.410. The section referred to—section 2025.410—provides that a deponent or party may assert a valid written objection based upon defect in the deposition notice, i.e., that the notice does not comply with Code of Civil Procedure sections 2025.210 through 2025.290. (CCP, § 2025.410, subd. (a) [objections as to “irregularity” in deposition notice waived unless the “party promptly serves a written objection specifying that error or irregularity at least three calendar days prior to the date for which the deposition is scheduled.”].)

If a party or deponent asserts objections based on grounds other than defects in the notice, the party or deponent must nevertheless appear for the deposition as noticed, unless the party or deponent files a motion to stay the taking of the deposition and quashing the deposition notice (CCP, § 2025.410, subd. (c)) or a motion for a protective order (CCP, § 2025.420). (See CCP, § 2025.280, subd. (a) [“The service of a deposition notice . . . is effective to require any deponent who is a party to the action . . . to attend and testify”].)

Thus, the question before the Court is whether Dolby asserted valid objections concerning defects in the deposition notice.

In its objections to the specific topics of examination listed in the deposition notice, Dolby objected to the topics on the grounds of relevance, overbreadth, undue burden, vagueness and ambiguity, and on the ground that ArcSoft has not shown good cause and set forth specific facts justifying the discovery. For example, ArcSoft listed the first topic of examination in its deposition notice as follows: “Business dealings between DOLBY and Samsung Group during the RELEVANT TIME PERIOD.” (Dao Decl., Ex. 2.) Dolby objected as follows:

Dolby objects to Topic of Examination 1 on the grounds that it is overbroad, unduly burdensome and seeks information that is not relevant to the subject matter of this action or not reasonably calculated to lead to the discovery of admissible evidence. Dolby further objections to “business dealings” and “Samsung Group” as vague and ambiguous and not subject to reasonable interpretation. It is entirely unclear what ArcSoft means by “business dealings” as this can encompass a very broad range of topics that are unrelated to this litigation. This vague and ambiguous phrase makes it impractical if not impossible to prepare a witness when Dolby is left to speculate what “business dealings” means. In addition, Dolby has no licensee named “Samsung Group” and thus the topic is unintelligible. Accordingly, Dolby will not produce a witness to testify on Topic of Examination 1. (Id.)

Dolby’s objections to the remaining 29 topics of examination are substantially similar, with some of the objections adding that “ArcSoft has been denied discovery relating to this topic . . . on the grounds that ArcSoft did not show good cause and specific facts justifying this discovery[] [and] ArcSoft has still not shown good cause and specific facts justifying this discovery.” (Id., at p. 6.)

As a threshold matter, objections on the grounds of relevance, overbreadth, undue burden, vagueness and ambiguity, and by reason of the Court’s prior orders are not objections based on defects in the deposition notice. Under Code of Civil Procedure section 2025.230, a deposition notice to an organizational deponent must “describe with reasonable particularity the matters on which examination is requested” and an objection on the ground that the topics in a notice to an organizational deponent are not “reasonably particularized” is an objection based upon a defect in the notice. Dolby did not expressly object to any of the topics on the ground of reasonable particularity. While an objection on the basis of vagueness and ambiguity is not technically the same as an objection on the basis of failure to reasonably particularize the topics of examination, there could have been room for argument that Dolby’s vagueness objections were meant to be objections on the basis of reasonable particularity. Dolby, however, did not make that argument and, given that all of the other objections were not based upon defects or irregularities in the notice, the Court will not construe the vagueness objections as something they are not. In other words, looking at Dolby’s objections as a whole, it is clear that Dolby was not objecting on the ground that the deposition notice was procedurally irregular or defective.

The proper procedure for Dolby to assert its objections would have been to file a motion for a protective order under section 2025.420 or a motion to stay the deposition and quash the notice under section 2025.410, subdivision (c). Dolby did not file a motion for a protective order or to quash the deposition notice. It was therefore required to appear for the deposition. (CCP, § 2025.280, subd. (a).)

Because Dolby failed to serve a valid objection to a defect or irregularity in the deposition notice, ArcSoft’s motion to compel Dolby to designate and produce a PMK in compliance with the deposition notice is GRANTED.

               D.           Request for Monetary Sanctions

ArcSoft requests monetary sanctions against Dolby in connection with the motion to compel Dolby to produce a PMK in the amount of $12,080. ArcSoft cites Code of Civil Procedure section 2023.010 as the statutory basis of its request.

As indicated above in connection with the previous motion, section 2023.010 does not authorize an award of sanctions.

Because ArcSoft failed to cite the statutory authority authorizing sanctions, ArcSoft’s request for monetary sanctions in connection with its motion to compel Dolby to produce a PMK for a deposition is DENIED.

IV.           Dolby’s Motion for Contempt, Non-Monetary and Monetary Sanctions

On 29 May 2014, based upon the assertion that ArcSoft has failed to comply with two previous discovery orders, Dolby filed a motion seeking the following relief: (1) an order holding ArcSoft in contempt of court for violating the Court’s orders entered on 22 February 2013 and 26 February 2014; (2) terminating sanctions striking ArcSoft’s answer, affirmative defenses and counterclaims or, in the alternative, to enter various issue and evidentiary sanctions; and (3) monetary sanctions in the amount of $62,080.

On 27 June 2014, ArcSoft filed an opposition to the motion, opposing the motion on the grounds that (1) Dolby’s motion for contempt is procedurally defective, (2) ArcSoft did not willfully violate either of the discovery orders, and (3) even if the Court were to find a technical violation of either order, the sanctions sought are well out of proportion with any violation and therefore inappropriate.

On 3 July 2014, Dolby filed a reply brief in support of its motion.

               A.           Facts Giving Rise to the Motion

                              1.            Alleged Violation of the 22 February 2013 Order

On 22 February 2013, the Court granted Dolby’s motion to compel ArcSoft to produce a PMK for a deposition. Pursuant to the order, ArcSoft was required to produce a witness that could identify the Dolby technology that was distributed in ArcSoft products and identify the customers to whom the technology was distributed.

On 11 March 2013, in accordance with the Court’s 22 February 2013 order, ArcSoft designated and produced Michael Lin as its PMK. At the deposition, ArcSoft provided an exhibit purporting to list all the ArcSoft customers that received Dolby technology. During the deposition, Mr. Lin testified that no ArcSoft customers received products containing Dolby technology other than those listed in the exhibit. (Decl. of Scott, Ex. 3, at 75:9-17.)

On 22 August 2013, Mr. Lin was produced by ArcSoft for another PMK deposition. During the deposition, Mr. Lin again testified that the exhibit produced for the 22 February 2013 deposition was complete and accurate. (Id., Ex. 4, 227:16-20.)

On 14 October 2013, ArcSoft provided Dolby with a revised version of the deposition exhibit. The revised exhibit listed a customer that was not identified in the original exhibit and removed several customers that appeared in the first exhibit.

On 6 November 2013, ArcSoft again produced a PMK for deposition and provided Dolby with another version of the exhibit listing ArcSoft customers that had received products containing Dolby technology. The revised exhibit included six additional customers that were not previously disclosed. During the deposition, the PMK testified that the revised exhibit was a complete list of the customers that had received products containing Dolby technology. (Id., Ex. 7, 323:24-324:9.) Additionally, during the deposition, counsel for Dolby asked the PMK whether there was any information missing from the revised exhibit and whether ArcSoft intended to make any additional revisions. (Id.) ArcSoft’s PMK answered “no” to both of the questions. (Id.)

On 6 May 2014, ArcSoft provided Dolby with a fourth version of the exhibit, listing nine additional customers that had not been previously disclosed.

According to Dolby, the exhibit containing the list of ArcSoft customers that received Dolby technology remains inaccurate and incomplete. In support of this assertion, Dolby directs the Court to an ArcSoft press release dated 9 June 2008, identifying eight customers to which ArcSoft distributed a product called TotalMedia Theatre. According to Dolby, only three of the eight have been identified by ArcSoft. Additionally, Dolby directs the Court to documents and emails produced by ArcSoft during discovery showing additional customers that have received Dolby technology but were not disclosed. Dolby also asserts that, through a partial examination of the executable copies of software that the Court ordered ArcSoft to produce, Dolby now knows that ArcSoft has not identified all of the Dolby technologies that were distributed to ArcSoft customers.

Dolby also directs the Court to the declaration of Emilio Daireaux, who is a senior manager at Dolby. In his declaration, Mr. Daireaux states that, in April 2014, he attended a tradeshow in Las VegasNevada. (Decl. of Daireaux in Support of Mot. for Sanctions, ¶ 3.) At the tradeshow, Mr. Daireaux visited the booth operated by ArcSoft and was given a brochure of an ArcSoft product named “ArcVideo,” which advertised the inclusion of multiple Dolby technologies. (Id., ¶ 4, 5.) The ArcSoft employee at the booth stated that the ArcVideo products have been distributed for at least two years. (Id., ¶ 6.)

Dolby asserts that these facts show that ArcSoft has violated the Court’s 22 February 2013 order.

 

                              2.            Alleged Violation of the 26 February 2014 Order

On 26 February 2014, the Court ordered ArcSoft to produce executable versions of all software containing Dolby technology and identify the customers to whom the code was distributed. (Decl. of Scott, Ex. 2.) The Court also ordered ArcSoft to provide further responses to two of Dolby’s special interrogatories (“SI”). Relevant for the purposes of this motion, the Court ordered ArcSoft to provide a further response to SI No. 5, which asked ArcSoft to identify the Dolby technology included in each product by name and the number of the license agreement with Dolby by which ArcSoft claimed to have authority to sell or distribute the product.

According to Dolby, ArcSoft has failed to comply with both aspects of the 26 February 2014 order.

Concerning the executable copies of software, Dolby asserts that ArcSoft has failed to produce executable copies of software for all of the customers listed in the PMK exhibit and a number of customers that Dolby has discovered through the examination of materials produced by ArcSoft but have not been identified as receiving Dolby technology.

Concerning the further response to SI No. 5, Dolby asserts that ArcSoft’s initial further response was unverified and that its supplemental verified further response is not code-compliant. More specifically, Dolby points out that ArcSoft’s verified response lists contracts with Dolby, but then added the following qualifying language: “By listing such contracts, ArcSoft does not imply that ArcSoft custom specification and pay-through customers’ software gold masters were provided pursuant to a Dolby/ArcSoft contract as opposed to ArcSoft’s contract with its customers obligating the customer to obtain third party licenses and pay royalties relating to those technologies.” (Id., Ex. 27.) According to Dolby, this qualifying language violates the Court’s 26 February 2014 order “because it refuses to state which license agreements with Dolby gave ArcSoft the authority to distribute the product containing Dolby technology.” (Mem. of Ps & As in Support of Mot. for Sanctions, p. 10, emphasis in original.) Dolby asserts that this qualification “is an outright refusal to answer the precise question that the February 26 Order compels ArcSoft to answer: which specific Dolby-ArcSoft license agreement the implementation or distribution was pursuant to.” (Id., emphasis omitted.)

               B.           Non-Monetary and Monetary Sanctions

In its motion for sanctions, other than an order holding ArcSoft in contempt of court, which is addressed below, Dolby seeks the following relief: (1) terminating sanctions striking ArcSoft’s answer, affirmative defenses, and counterclaims; or (2) in the event that the Court does not enter terminating sanctions, issue and evidence sanctions directing that certain facts be taken as established;[11] and (3) monetary sanctions in the amount of $62,080.

Dolby seeks the above sanctions under Code of Civil Procedure sections 2030.300, subdivision (e), and 2031.310, subdivision (i). Section 2030.300, subdivision (e) provides that, “[i]f a party . . . fails to obey an order compelling further response to interrogatories, the court may make those orders that are just, including the imposition of an issue sanction, an evidence sanction, or a terminating sanction.” Section 2031.310, subdivision (i) authorizes the same sanctions for the failure to obey an order compelling further responses to inspection demands. Both sections further provide that, “[i]n lieu of, or in addition to, [non-monetary sanctions] the court may impose a monetary sanction.” (CCP, §§ 2030.300, subd. (e) and 2031.310, subd. (i).)

Two facts are prerequisite to the imposition of non-monetary sanctions: (1) there must be a failure to comply with a court order; and (2) the failure must be willful. (Liberty Mutual Fire Ins. Co. v. LcL Administrators, Inc. (2008) 163 Cal.App.4th 1093, 1102.) In the discovery context, willfulness may be found where the responding party “understood his [or her] obligation, had the ability to comply, and failed to comply.” (Deyo v. Kilbourne (1978) 84 Cal.App.3d 771, 787.)

Even where these prerequisite facts are present, however, the trial court has broad discretion in imposing discovery sanctions. (See Reedy v. Bussell (2007) 148 Cal.App.4th 1272, 1293.) In exercising this discretion, the court of appeal has indicated that the trial court should consider both the conduct being sanctioned and its effect on the party seeking discovery. (See Doppes v. Bentley Motors, Inc. (2009) 174 Cal.App.4th 967, 992.) Additionally, the trial court should “attempt to tailor the sanction to the harm caused by the withheld discovery” (id.) and the court’s discretionary authority in determining the appropriate sanction is limited by the principle that discovery sanctions are meant to be remedial rather than punitive (see Kahn v. Kahn (1977) 68 Cal.App.3d 372, 381). Put another way, the discretionary imposition of a sanction is proper when it is suitable and necessary to enable the party seeking discovery to obtain the objects of the discovery sought, but not when it places the prevailing party in a better position than if discovery had been obtained. (See Wilson v. Jefferson (1985) 163 Cal.App.3d 952, 958.) Finally, non-monetary sanctions are imposed upon an incremental basis depending upon the severity of the violation. (See Doppes, supra, 174 Cal.App.4th at 992.) “If a lesser sanction fails to curb misuse, a greater sanction is warranted: continuing misuses of the discovery process warrant incrementally harsher sanctions until the sanction is reached that will curb the abuse.” (Id., internal quotation marks and citations omitted.)

ArcSoft contends that it has not violated either of the Court’s orders and that, even if it has not provided Dolby with all of the information it seeks, the failure to do so was based upon ArcSoft’s inability to locate the information. In other words, ArcSoft asserts that any technical violations of the 22 February 2013 or the 26 February 2014 orders were inadvertent and should not be considered “willful” in determining whether non-monetary sanctions are authorized.

                              1.            Whether ArcSoft Willfully Violated the 22 February 2013 Order

As indicated above, in the 22 February 2013 order, the Court granted Dolby’s motion to compel ArcSoft to produce a PMK for a deposition, which required ArcSoft to produce a witness that could identify the Dolby technology that was distributed in ArcSoft products and the customers to whom the technology was distributed. Dolby claims that ArcSoft violated the order by producing multiple inconsistent versions of the exhibit containing the list of customers and products that were distributed by ArcSoft to its customers containing Dolby technology, which were produced in connection with the PMK deposition. Dolby further asserts that the declaration of Mr. Daireaux concerning the advertisement of the ArcVideo produce at the Las Vegas tradeshow in April 2014 demonstrates that ArcSoft has failed to disclose all of products containing Dolby technology that have been distributed to ArcSoft’s customers.

Concerning the declaration of Mr. Daireaux, ArcSoft asserts that Dolby has misconstrued (and now misrepresents to the Court) the brochure obtained from the trade show. Having reviewed the brochure attached to the declaration of Mr. Daireaux, the Court agrees with ArcSoft that the declaration does not support a finding that ArcSoft has violated the Court’s order. As ArcSoft points out, the ArcVideo brochure lists three Dolby technologies as potential technologies that an ArcSoft customer could specify to be included in their ArcVideo software. (Opp., p. 7.) ArcSoft further states that, “to date, no ArcVideo products have [been determined to] contain Dolby technology.” (Id.; see also Decl. of Lin in Support of Opp. to Mot. for Sanctions, ¶¶ 17-20.)

Concerning the multiple iterations of the PMK exhibit, ArcSoft contends that, rather than supporting a finding that ArcSoft has violated the Court’s 22 February 2013 order, the fact that ArcSoft has continued to update the exhibit is evidence that ArcSoft has diligently tried to comply with the order. According to ArcSoft, the “Mike Lin Deposition Exhibit” was created by ArcSoft to assist in-house counsel Michael Lin respond to questions on the topics noticed in Dolby’s notice of PMK deposition. (Opp., at p. 4.) ArcSoft further indicates that the creation of the exhibit was complicated by the fact that “the information sought by Dolby, and collected in the [exhibit], is not maintained in a central database, and many of the documents with relevant information (statements of work/specifications etc.) were maintained in separate business units in different locations in the United States, Taiwan and China.” (Id.)

Given the lack of a central database and the other difficulties related to the compiling of the information, ArcSoft asserts that it has continually attempted to update the customer/product list, which accounts for the multiple iterations of the exhibit. Moreover, in response to Dolby’s complaint that the latest version of the exhibit does not contain customers that were identified in earlier versions of the exhibit, ArcSoft maintains that, during the process of collecting and cross-referencing data, it was “determined that in several instances documents purporting to indicate Dolby technology was contained in an ArcSoft product turned out not to be the case.” (Id.) In other words, according to ArcSoft, “[t]he various iterations of the [exhibit] were a result of ArcSoft actively checking the accuracy of the [e]xhibit in light of discovery review for production to Dolby.” (Id., at p. 5.)

In sum, ArcSoft argues that Dolby has failed to demonstrate that it violated the 22 February 2013 order requiring it to produce a PMK prepared to testify on the topic of any products containing Dolby technology that was supplied by to its customers and that, if it turns out that it has failed to identify some customers or products, the failure to comply with the order was not willful.

Having reviewed the voluminous record concerning this matter, the Court finds that any failure by ArcSoft to comply with the 22 February 2013 order was not willful. As ArcSoft points out, it has produced close to 5,000 documents in this case, provided a PMK for three days of deposition, delivered 271 executable software CDs of its products for Dolby to test and evaluate, and provided several iterations of the customer list that was generated in connection with the PMK deposition. These facts, along with the fact that many of the customers that Dolby claims should have been disclosed came from Dolby’s inspection of discovery produced by ArcSoft, belie Dolby’s contention that ArcSoft has engaged in the willful withholding of discovery.

Based upon the above discussion, Dolby has not demonstrated that ArcSoft willfully violated the Court’s 22 February 2013 order.

                              2.            Whether ArcSoft Willfully Violated the 26 February 2014 Order

In the 26 February 2014 order, the Court ordered, among other things, that ArcSoft produce executable versions of all software that contains Dolby technology and to provide a further response to SI No. 5 by identifying which specific Dolby-ArcSoft license agreement under which each distribution of Dolby technology was made to ArcSoft customers.

Dolby asserts that ArcSoft has violated the 26 February 2014 order by failing to produce executable software for two customers identified by ArcSoft itself as receiving Dolby technology and twenty-two additional customers that Dolby claims should have been identified by ArcSoft. Dolby further maintains that ArcSoft’s supplemental response to SI No. 5 does not comply with the Court’s order.

Concerning Dolby’s first contention, ArcSoft argues that it has produced all executable software in its possession for customers that it has identified as having received products containing Dolby technology. Concerning the remaining twenty-two customers, ArcSoft contests Dolby’s assertion that the customers should have been included in the customer list. According to ArcSoft, it has not added the twenty-two companies to the customer list because it has not yet been determined that the listed companies received ArcSoft software containing Dolby technology. (Opp., at p. 6.) More specifically, ArcSoft states that, as of the date of the filing of its opposition to the motion for sanctions, it “cannot locate a license agreement or related statements of work for 14 of the 22 companies, and therefore has not been able to confirm provision of Dolby technology to the purported customer.” (Id.; see also Decl. of Lin, ¶ 11.) ArcSoft further states that, “[f]or the other 8 companies for which a license agreement was found, ArcSoft has not yet been able to locate statements of work or other documents listing the specific components of the software in order to determine if Dolby technology is included [and] ArcSoft is currently conducting further research and tests to confirm whether Dolby technology was included in any software supplied to these 8 companies.” (Id.)

For the same reasons discussed in connection with the 22 February 2013 order concerning ArcSoft’s difficulty in locating the information sought by Dolby and ordered to be produced by the Court, the Court finds that ArcSoft has not willfully violated the 26 February 2014 order as it pertains to the production of executable software. If all of the software in ArcSoft’s possession pertaining to the customers identified by ArcSoft having received Dolby technology has been produced, then ArcSoft has complied with the order as it applies to those customers. The failure to supply software pertaining to the additional twenty-two customers that Dolby believes should be identified in the customer list is more problematic because the order requires the production of all executable software for customers that received Dolby technology and ArcSoft has not suggested that it is unable to comply—only that it is taking a long time to do so given the state of its records. While the Court finds that Dolby has not demonstrated a willful violation of the 26 February 2014 order, ArcSoft is now on notice that the types of non-monetary sanctions sought by Dolby may be seen as appropriate if evidence is presented in the future demonstrating that ArcSoft has failed to comply with the Court’s orders or has been deliberately withholding discovery. (See Doppes, supra, 174 Cal.App.4th at p. 992 [indicating that non-monetary sanctions are appropriate after lesser sanctions have proven ineffective at compelling compliance].)

As to Dolby’s argument regarding ArcSoft’s supplemental response to SI No. 5, the Court disagrees with Dolby that the supplemental response fails to comply with the 26 February 2014 order.

SI No. 5 asked ArcSoft to identify the Dolby technology included in each product by name and the number of the license agreement with Dolby by which ArcSoft claims to have authority to sell or distribute the product. In the 26 February 2014 order, the Court stated that, “[w]ithin sixty (60) days, ArcSoft shall respond to Dolby’s Special Interrogatory 5 by identifying with respect to each implementation or distribution of Dolby technology to its customers, which specific Dolby-ArcSoft license agreement the implementation or distribution was pursuant to.” (See Order dated 26 February 2014.)

Following the entry of the 26 February 2014 order, ArcSoft provided an unverified supplemental response on 6 May 2014. The unverified response identified five contracts for most of its customers without specifying which of the five actually governed any particular distribution to that customer. (See Decl. of Scott in Support of Mot. for Sanctions, Ex. 26.)

On 15 May 2014, ArcSoft provided a supplemental verified response to SI No. 5. The verified response is in the form of a chart and lists eight pages of agreements between ArcSoft and Dolby (by license agreement number) as to ArcSoft’s custom specification and pay-through customers. (Id., Ex. 27.) The chart contains a number of explanatory notes. For instance, at the end of the chart referencing the agreements for ArcSoft’s pay-through customers, ArcSoft provided the following notes:

This chart has been reconstructed using data from years ago to the best of ArcSoft’s ability. ArcSoft reserves the right to amend if further information is determined to apply.

* As to ArcSoft’s retail customers, the following Dolby-ArcSoft Agreements authorized ArcSoft’s software delivery to its retail customers: [setting forth five agreement numbers]. As to ArcSoft’s custom specification and pay-through customers, the contract references in this column refer to those Dolby/ArcSoft contracts related to [certain Dolby technology] which ArcSoft was licensed to develop. By listing such contracts, ArcSoft does not imply that ArcSoft custom specification and pay-through customers’ software gold masters were provided pursuant to a Dolby/ArcSoft contract as opposed to ArcSoft’s contract with its customers obligating the customer to obtain third party licenses and pay royalties relating to those technologies. (Id., at p. 11.)

Dolby argues that this qualifying language renders the response non-code-compliant. The Court disagrees. Code of Civil Procedure section 2030.220 requires responses to interrogatories to be “as complete and straightforward as the information reasonably available to the responding party permits.” (CCP, § 2030.220, subd. (a).)

Here, ArcSoft has provided the declaration of Sean Bi to explain why the notation that Dolby takes issue with is necessary to provide a complete and straightforward response. In his declaration, Mr. Bi explains that ArcSoft has mainly two types of business: retail software and Original Equipment Manufacturer (“OEM”) software service. (Decl. of Bi in Support of ArcSoft’s Opp. to Dolby’s Mot. for Sanctions, ¶ 3.) The retail software business targets end users and such products are primarily sold online as downloads. (Id., ¶ 4.) For these products, ArcSoft licenses third party technologies (from companies such as Dolby) and pays those third party licensors pursuant to agreements with the third-party after receiving payment from the und user purchases. (Id.)

In contrast, OEM software business targets hardware device makers, which accounts for more than 90% of ArcSoft’s revenue. (Id., ¶ 5.) As to the OEM business, ArcSoft signs license agreements with the customers, but the licenses only apply to ArcSoft’s own intellectual property and does not convey rights of any third-party intellectual property to the OEM. (Id.) Instead, the ArcSoft license agreement requires the OEM customers to procure all necessary third-party licenses and to pay the applicable third-party license fees. (Id.) Mr. Bi declares that this is a common practice in the software licensing industry and that OEMs understand that they are responsible for procuring necessary rights and paying the royalties for technology so that they can use third-party technologies. (Id.) For a small number of customers, ArcSoft enters into “pay-through” agreements. (Id.) In the “pay-through” agreement, ArcSoft provides a service to the OEM customer by collecting all royalties owed by the OEM, including third party royalties, and then paying the third parties on behalf of the OEM customer. (Id.)

The Court reads the notation following the chart pertaining to ArcSoft’s pay-through customers as simply explaining that the Dolby technology may have been distributed pursuant to an agreement whereby ArcSoft was not purporting to convey intellectual property rights concerning Dolby technology and requiring the customer to obtain a license from Dolby concerning the technology. Such explanations are permitted under Code of Civil Procedure section 2030.220 insofar as they are necessary to provide a complete and straightforward answer to an interrogatory.

Based upon the above discussion, Dolby has not demonstrated that ArcSoft willfully violated the Court’s 26 February 2014 order.

                              3.            Conclusion

For the reasons discussed above, Dolby has not demonstrated that ArcSoft willfully violated the Court’s 22 February 2013 or 26 February 2014 orders. Accordingly, Dolby’s motion for non-monetary sanctions in the form of terminating, evidence, and issue sanctions, and monetary sanctions in the amount of $62,080 is DENIED.

               C.           Contempt

In addition to the non-monetary sanctions discussed above, Dolby seeks an order declaring ArcSoft in contempt of court for the violation of the 22 February 2013 and 26 February 2014 orders.

Dolby requests an order of contempt under Code of Civil Procedure section 2023.030, subdivision (e), which provides that “[t]he court may impose a contempt sanction by an order treating the misuse of the discovery process as a contempt of court.”

Misuses of the discovery process include “[d]isobeying a court order to provide discovery.” (CCP, § 2023.010, subd. (g).) However, civil contempt proceedings are quasi-criminal in nature, and therefore, the respondent in such proceedings is afforded certain procedural protections. (In re Kreitman (1995) 40 Cal.App.4th 750, 754.) First, in order to initiate a contempt proceeding, the party seeking the order must file an affidavit charging the facts constituting contempt. (CCP, §§ 1211, 1212; In re Koehler (2010) 181 Cal.App.4th 1153, 1169 [filing of sufficient affidavit is a “jurisdictional prerequisite” to contempt proceedings].)  Second, the burden is on the moving party to demonstrate the factual predicates to a finding of contempt, which are: (1) the rendition of a valid order; (2) actual knowledge of the order; (3) ability to comply; and (4) willful disobedience. (In re Koehler, supra, 181 Cal.App.4th at p. 1160; Conn v. Super. Ct. (1987) 196 Cal.App.3d 774, 784.)

As indicated above, Dolby has not demonstrated that ArcSoft willfully disobeyed the Court’s 22 February 2013 or 26 February 2014 orders. Moreover, even if the Court had found a technical violation of either of its previous discovery orders, the court of appeal has held that contempt sanctions are only appropriate for “flagrant abuses” of the discovery process. (See In re De La Parra (1986) 184 Cal.App.3d 139, 143-144.) Here, rather than indicating that ArcSoft has engaged in the flagrant abuse of the discovery process, the record indicates that ArcSoft has attempted to comply with its discovery obligations. Accordingly, contempt sanctions are unavailable and Dolby’s request for an order finding ArcSoft in contempt of court is DENIED.

V.            ArcSoft’s Motion to Compel Third-Party Defendant SanDisk to Produce Documents Withheld on the Basis of the Attorney-Client Privilege

               A.           Facts Giving Rise to the Motion

On 24 December 2012, ArcSoft served its first set of requests for production of documents (“RPD”) on SanDisk.

On 22 March 2013, SanDisk served ArcSoft with responses to the RPD and thereafter produced documents in conformity with its responses. In total, SanDisk produced approximately 2,800 documents.

On 10 March 2014, ArcSoft deposed Greg Stevens (SanDisk’s Director II, Software Management Client Storage Solutions). During the deposition, counsel for SanDisk objected to the use of several documents that had been produced by SanDisk on the basis of the attorney-client privilege.

The next day, on 11 March 2014, counsel for SanDisk sent the first of three claw-back letters to counsel for ArcSoft, seeking the return of 19 documents pursuant to Code of Civil Procedure section 2031.285, which authorizes parties who inadvertently produce privileged documents during discovery to demand the return of the documents. (Decl. of Carmen Aviles in Support of Mot. to Compel Withheld Documents, Ex. 1.)

On 4 April 2014, counsel for SanDisk sent another letter to counsel for ArcSoft, seeking the return of 25 additional documents that had been inadvertently produced. (Id., Ex. 2.)

On 12 May 2014, counsel for SanDisk sent a third letter to counsel for ArcSoft, seeking the return of two additional documents. (Id., Ex. 3.)

On 2 May 2014, counsel for ArcSoft sent a meet and confer letter to counsel for SanDisk, taking the position that several of the documents should not have been designated as privileged and were improperly clawed back. (Id., Ex. 4.)

On 5 May 2014, counsel for SanDisk responded to ArcSoft’s counsel’s meet and confer letter, indicating that SanDisk would produce a privilege log. (Id., Ex. 5.) ArcSoft received SanDisk’s privilege log on 12 May 2014.

On 23 May 2014, after reviewing the privilege log, counsel for ArcSoft sent another meet and confer letter to SanDisk, indicating that it still had concerns regarding the assertion of privilege as to the clawed back documents and further indicating concern as to other documents referred to in the privilege log. (Id., Ex. 7.)

On 28 May 2014, counsel for SanDisk requested that counsel for ArcSoft identify the documents that she believed were improperly clawed back or withheld. The same day, counsel for ArcSoft sent an email to counsel for SanDisk, listing the documents ArcSoft believed were improperly withheld. (Id., Ex. 9.)

On 29 May 2014, SanDisk withdrew its assertion of privilege as to five documents on its privilege log and served ArcSoft with an amended privilege log.

On 18 June 2014, having reached an impasse concerning the withheld documents, ArcSoft filed a motion to compel SanDisk to produce the withheld documents.

SanDisk filed an opposition to the motion on 27 June 2014.

B.           Analysis

ArcSoft seeks an order compelling SanDisk to produce thirty-eight documents that it contends were improperly withheld on the basis of the attorney-client privilege and/or the work product doctrine. Thirty-three of the documents were originally produced by SanDisk and then subsequently clawed back. The remaining five documents were never produced, but ArcSoft contends that they were improperly designated as privileged in SanDisk’s privilege log.

The withheld documents fall into three categories. The first category consists of sixteen documents (privilege log entries 106, 107, 224, 225, 416, 417, 424, 470, 471, 472, 473, 512, 513, 514, 515, and 575), which are identified in the privilege log as concerning spreadsheets prepared at the direction of SanDisk’s Chief Legal Officer Jim Brelsford. The second category consists of eight documents (privilege log entries 14, 527, 769, 770, 771, 772, 773, and 774), which are identified in the privilege log as discussions concerning legal advice given by SanDisk’s counsel. The final category consists of the remaining 14 documents (privilege log entries 12, 50, 223, 415, and 443-452), which are identified in the privilege log as discussions reflecting SanDisk employees’ intent to seek legal advice from counsel.

In response to a motion to compel, the burden is on the party claiming the privilege to establish whatever preliminary facts are essential to the claim. (See Alpha Beta Co. v. Super. Ct. (1984) 157 Cal.App.3d 818, 824-825.)  In the context of the attorney-client privilege, the party claiming the privilege is required to prove (usually by declarations) the existence of the attorney-client relationship when the communication was made. (Id.) Once the party claiming the privilege makes this preliminary showing, the communications are presumed to have been made in confidence and the burden shifts to the party seeking discovery to disprove those facts or to prove some applicable statutory exception (e.g., that the privilege has been waived). (Id.; see also Evid. Code, § 917.)

As a preliminary matter, ArcSoft’s entire argument hinges on the fact that none of the communications listed in the privilege log are from or to an attorney. SanDisk does not dispute that the communications at issue are between non-attorneys. Based on this fact, ArcSoft contends that the attorney-client privilege is facially inapplicable.

Given ArcSoft’s argument, the question before the Court is whether the attorney-client privilege may be asserted for communications between non-attorneys. In Zurich American Insurance Co. v. Superior Court (2007) 155 Cal.App.4th 1485 (“Zurich”), the court of appeal for the second district addressed this very issue. In that case, the plaintiff sought the production of documents in Zurich’s insurance claim file and Zurich refused to produce the documents on the bases of the attorney-client privilege and the work product doctrine. (Id., at pp. 1490-1491.) The plaintiff filed a motion to compel the production of the documents and the dispute was referred to a discovery referee. (Id., at p. 1491.) The discovery referee concluded, among other things, that only “documents that have been created by counsel, or received by counsel, or that contain direct communications from counsel” were protected by the attorney-client privilege and work product doctrine. (Id., emphasis added.) Zurich sought writ relief.

The court of appeal framed the issue as follows: “whether the corporate attorney-client privilege extends to confidential communications between agents of the client regarding legal advice and strategy, in which the corporation’s attorneys are not directly involved or which do not include excerpts of direct communications from the attorneys.” (Id., at p. 1494.)  Addressing this issue, the court began its analysis with the proposition that Evidence Code section 952 expressly contemplates that confidential communications include information transmitted to persons “to whom disclosure is reasonably necessary for the transmission of the information,” and those whom disclosure is reasonably necessary for “the accomplishment of the purpose for which the lawyer is consulted.” (Id., at p. 1495, quoting Evid. Code, § 952.) The court then noted that difficulties arise concerning the attorney-client privilege in the corporate context where the corporate officers and employees charged with carrying out any legal advice may not be at the level in the corporate hierarchy in which they would actually meet with the corporation’s attorney. (Id., at pp. 1496-1497.) Based upon this complication in the corporate context, the court stated that “in order to implement the advice of lawyers, the advice must be communicated to others within the corporation [and] [i]t is neither practical nor efficient to require that every corporate employee charged with implementing legal advice given by counsel for the corporation must directly meet with counsel or see verbatim excerpts of the legal advice given.” (Id., at p. 1498.) Put simply, the court held that communications between non-attorney employees of a corporation may be protected by the attorney-client privilege.

The court then formulated the following analysis. “The first relevant inquiry is whether the document contains a discussion of legal advice or strategy of counsel.” (Id., at p. 1503.) “If it is determined that the document reflects legal advice or opinions . . . the court must determine whether [the corporation] waived the privilege by distributing the advice within the corporation.” (Id.) The court then stated that the “key concept” is whether the employees acting on or discussing the legal advice “need to know” the information. (Id.) “While involvement of an unnecessary third person in attorney-client communications destroys confidentiality, involvement of third persons to whom disclosure is reasonably necessary to further the purpose of the legal consultation preserves confidentiality of communication.” (Id., emphasis and internal quotation marks omitted.)

Applying the above principles to the present case, it is clear that the withheld documents in the first two categories are subject to the attorney-client privilege and were properly withheld.

The documents in the first category consist of spreadsheets “prepared at the request of Jim Brelsford, Esq.” (Decl. of Aviles in Support of Mot. to Compel, Sealed Ex. 6.) According to SanDisk, these spreadsheets were generated at the request of counsel in order to analyze the legal issues of this case and for counsel to render legal advice. (SanDisk Opp., p. 3.) As SanDisk points out, the attorney-client privilege extends to legal investigations and the resulting product of those investigations, even when the investigations are conducted by and the resulting documents are created by non-lawyers, as long as they are done at the request of counsel. (See Scripps Health v. Super. Ct. (2003) 109 Cal.App.4th 529, 534.) Thus, documents in the first category were properly withheld.

The documents in the second category are identified in the privilege log as discussions concerning legal advice given by SanDisk’s counsel. For instance, privilege log entry 527 indicates that it is an email “[d]iscussing legal advice re: analysis of contract provisions.” (Decl. of Aviles in Support of Mot. to Compel, Sealed Ex. 6.) The remaining seven entries in this category are substantially similar. The notations in the privilege log set forth the preliminary facts essential to the claim of privilege. (See Alpha Beta Co., supra, 157 Cal.App.3d at pp. 824-825.) Thus, the presumption arises that the communications are confidential. (Evid. Code, § 917.) Because ArcSoft has not rebutted this presumption, the documents in the second category were properly withheld.

The documents in the final category are identified in the privilege log as discussions reflecting SanDisk employees’ intent to seek legal advice from counsel and consist of privilege log entries 12, 50, 223, 415, and 443-452. For instance, privilege log entry 452 indicates that it is an email between non-attorneys “[r]eflecting intent to seek legal advice re: payment of royalties from SanDisk legal department.” (Decl. of Aviles in Support of Mot. to Compel, Sealed Ex. 6.)

SanDisk asserts that “[c]ommunications between non-lawyers of the intent to seek legal advice are well established as protected by the attorney-client privilege. (SanDisk Opp., p. 6.) However, notwithstanding SanDisk’s assertion that the law on this issue is well-settled, it only cites to federal cases. In United States v. ChevronTexaco Corp. (N.D. Cal. 2002) 241 F. Supp.2d 1065, the trial court stated that “[m]aterials, transmitted between nonlawyers, that reflect matters about which the client intends to seek legal advice are comparable to notes a client would make to prepare for a meeting with her lawyer . . . [and] [i]t would undermine the purpose of the attorney-client privilege not to extend protection to such notes.”[12] (Id., at p. 1077.)

The Court disagrees with the conclusion of the federal district court. The attorney-client privilege is meant to protect against the intrusion upon confidential communications made between an attorney and his or her client. (Evid. Code, § 952.) In the corporate context, the courts of this state have held that, when a corporate employee is acting upon or discussing legal advice given by counsel to those employees higher in the corporate hierarchy, the communications retain their privileged nature. (Zurich, supra, 155 Cal.App.4th at p. 1498.) Discussion between non-lawyers concerning the intent to seek legal advice do not fall within the privilege because no legal advice has been rendered. SanDisk has cited no binding authority indicating otherwise. Thus, the documents in the third category of the privilege log entries must be produced.

Based upon the above discussion, ArcSoft’s motion to compel the production of documents withheld on the basis of the attorney-client privilege is GRANTED as to privilege log entries 12, 50, 223, 415, and 443-452 and DENIED as to the remaining entries.

Conclusion and Order

Both parties’ motions to seal documents in support of or in opposition to the motions presently before the Court are GRANTED.

ArcSoft’s motion to compel further responses to SI Nos. 80, 82-93, and 95-98 is GRANTED IN PART and DENIED IN PART. The motion is GRANTED as to SI Nos. 80, 83, 84, 86-93, and 95. The motion is DENIED as to SI Nos. 85 and 96-98. Accordingly, Dolby shall serve verified, code-compliant further responses, without objection (except for attorney-client privilege and the attorney work product doctrine, which have been preserved with regard to the interrogatories to which the objections were asserted) to SI Nos. 80, 83, 84, 86-93, and 95 within 20 calendar days of the filing of this Order.

ArcSoft’s request for monetary sanctions in connection with the motion to compel further responses to the SI is DENIED.

ArcSoft’s motion to compel Dolby to produce a PMK for a deposition is GRANTED. Dolby shall designate and produce a PMK witness for deposition within 30 calendar days of the filing of this Order on a date and time mutually agreeable by all parties.

ArcSoft’s request for monetary sanctions in connection with its motion to compel Dolby to produce a PMK for a deposition is DENIED.

Dolby’s motion for an order holding ArcSoft in contempt of court and for non-monetary and monetary sanctions is DENIED.

ArcSoft’s motion to compel third-party defendant SanDisk to produce documents withheld on the basis of the attorney-client privilege is GRANTED IN PART and DENIED IN PART. The motion is GRANTED as to privilege log entries 12, 50, 223, 415, and 443-452. The motion is otherwise DENIED. Accordingly, SanDisk shall produce the documents and communications identified in its privilege log as entries 12, 50, 223, 415, and 443-452 within 20 calendar days of the filing of this Order.

 



[1] “Each exhibit must be separated by a hard 81/2 x 11 sheet with hard paper or plastic tabs extending below the bottom of the page, bearing the exhibit designation. An index to exhibits must be provided. Pages from a single deposition and associated exhibits must be designated as a single exhibit.”

[2] In the motion, ArcSoft asks the Court to seal the following documents: (1) un-redacted version of ArcSoft’s Notice of Motion and Motion to Compel Further Responses, including ArcSoft’s memorandum in support of its motion; (2) ArcSoft’s separate statement in support of its motion; and (3) Exhibits 1 through 3 attached to the Declaration of Anne-Marie Dao filed in support of ArcSoft’s motion, which include a copy of ArcSoft’s second set of SI (Exhibit 1), Dolby’s responses to the SI (Exhibit 2), and ArcSoft’s counsel’s meet and confer letter dated 17 April 2014 (Exhibit 3).

[3] In the motion, ArcSoft asks the Court to seal three documents: (1) an un-redacted version of ArcSoft’s reply in support of its motion to compel further responses; (2) a supplemental declaration filed by ArcSoft’s counsel; and (3) Exhibit 9 to ArcSoft’s counsel’s supplemental declaration.

[4] In the motion, ArcSoft asks the Court to seal the following documents: (1) an un-redacted version of ArcSoft’s memorandum in support of its motion to compel Dolby to produce a person most knowledgeable; (2) the Declaration of Gary Gleason in support of the motion; and (3) the first two exhibits attached to the Gleason declaration.

[5] In the motion, ArcSoft asks the Court to seal an un-redacted version of the memorandum in support of the motion to compel and nine exhibits (consisting of SanDisk’s privilege logs and documents produced in discovery) attached to the memorandum.

[6] In the motion, ArcSoft asks the Court to seal the following documents: (1) an un-redacted version of ArcSoft’s memorandum in support of its opposition to Dolby’s motion for non-monetary sanctions and contempt; (2) the Declaration of Anne-Marie Dao in support of the opposition; (3) exhibits 2, 3, 5-10, 12, 13, 15, 16, and 18-22 attached to the Dao declaration; (4) the Declaration of Mike Lin in support of the opposition; (5) exhibits 1 and 2 attached to the Lin declaration; and (6) the Declaration of Sean Bi in support of the opposition.

[7] In the motion, Dolby asks the Court to seal un-redacted copies of the following documents: (1) Dolby’s memorandum in support of its opposition to ArcSoft’s motion to compel the deposition of Dolby’s person most knowledgeable; (2) Dolby’s separate statement; (3) exhibit 1 to the Declaration of Timothy Scott filed in opposition to ArcSoft’s motion; (4) the Declaration of Leo Spooner III filed in opposition to ArcSoft’s motion; and (5) exhibit 1 attached to the Spooner III declaration.

[8] In the motion, Dolby asks the Court to seal an un-redacted copy of its memorandum in support of the motion for sanctions, the Declaration of Timothy Scott filed in support of the motion, and exhibits 2-8, 10-11, 13-19, 21, and 26-31 attached to the Scott declaration.

[9] In the motion, Dolby asks the Court to seal exhibit 1 to the Declaration of Timothy Scott filed in support of Dolby’s opposition to ArcSoft’s ex parte application for an extension of time.

[10] Because the parties have lodged the discovery requests and the responses to the requests (as well as their separate statements) under seal, in an effort to preserve the confidentiality of the information, the Court will be intentionally vague when referring to ArcSoft’s SI and Dolby’s responses in its analysis.

[11] Concerning the request for evidentiary sanctions, third-party defendant SanDisk filed a Statement Regarding Dolby’s Motion for Sanctions. In the filing, SanDisk states that, “to the extent the Court’s order would apply to ArcSoft’s third-party claims against SanDisk, SanDisk objects to two [of the] proposed sanctions.” (SanDisk’s Opp. to Dolby’s Mot. for Sanctions, p. 1.) Specifically, SanDisk objects to Dolby’s request for an order deeming ArcSoft “to have sold at least hose number of units at the highest volume referenced in the tiers.” (Id.) According to SanDisk, the evidence produced in this litigation shows that ArcSoft’s distributions of the MediaConverter to SanDisk were substantially lower than the highest “tier” in SanDisk’s licensing agreement with ArcSoft. (Id.) Second, SanDisk objects to Dolby’s request for an order that all versions of the ArcSoft MediaConverter licensed to SanDisk be deemed to include three specific Dolby technologies—Dolby Digital, Dolby Digital Plus and Dolby TrueHD—which, according to SanDisk, is not supported by the evidence.

[12] The court, however, did not cite any authority upon which it based this legal conclusion. The other case cited by SanDisk is Datel Holdings Ltd. v. Microsoft Corporation, 09-cv-05535-EDL, 2011 U.S. Dist. LEXIS 30872 (N.D. Cal. March 11, 2011), which does add anything to the analysis.

 

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