Palmchip Corp. v. Ralink Technology Corp., et al.		CASE NO. 112CV234653
DATE: 25 July 2014	TIME: 9:00	LINE NUMBER: 7

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 Thursday 24 July 2014.  Please specify the issue to be contested when calling the Court and counsel.

On 25 July 2014, the motions of defendants Ralink Technology Corporation, a Taiwan corporation, (“Ralink Taiwan”), and Ralink Technology Corporation, a California corporation, (“Ralink USA”) for (1) reconsideration of the Court’s 9 June 2014 order granting the plaintiff’s motion to have its requests for admissions deemed admitted, and (2) for an order prohibiting the plaintiff from using confidential documents produced in this case under a protective order in the related federal patent infringement action currently pending in the United States District Court for the Central District of California, and for monetary sanctions were argued and submitted. Plaintiff Palmchip Corporation (“Palmchip”) filed formal oppositions to each of the motions. In the opposition to the second motion, Palmchip also seeks the imposition of monetary sanctions.

On the same date, the Court also heard Palmchip’s renewed motion to compel Ralink Taiwan to produce documents responsive to Palmchip’s requests for production of documents and for monetary sanctions. Defendant Ralink Taiwan filed a formal opposition to the motion.

Statement of Facts

Palmchip is a developer and licensor of technology used in the design and creation of semiconductor chips for wireless communications. This action arises from a licensing relationship among the parties by which Palmchip licensed certain intellectual property to Ralink Taiwan, Ralink USA, Mediatek, Inc., and Mediatek USA, Inc. (collectively “Defendants”) pursuant to a written license agreement executed in 2005 and an implied license that arose in 2007. Palmchip alleges that Defendants exceeded the scope of the licenses in their use of Palmchip’s technology. Palmchip further alleges that Defendants fraudulently misrepresented material facts during the negotiation of what became the 2007 implied license and continued to make misrepresentations after the implied license arose.

Based upon these allegations, Palmchip filed this action on 19 October 2012. In the operative first amended complaint, filed 6 August 2013, Palmchip asserts claims for (1) breach of contract, (2) fraud, (3) negligent misrepresentation, (4) accounting, (5) conversion, (6) unjust enrichment, and (7) unfair competition.

Since 6 December 2013, this Court will have had eight calendar settings for discovery with a total of 20 motions.  There are additional settings for 8 August 2014 and 15 August 2014.

Discussion

I.             Motions for Reconsideration and Renewal

Defendants move for reconsideration of the Court’s 9 June 2014 order (the “June 9 Order”) granting Palmchip’s motion to have its requests for admissions deemed admitted. Palmchip has filed a “renewed” motion to compel Ralink Taiwan to produce documents, which relief was previously requested and addressed by the Court in the June 9 Order.[1]

Defendants cite Code of Civil Procedure section 1008, subdivision (a), which authorizes motions for reconsideration, as the statutory basis for their motion. Palmchip does not cite section 1008 as the statutory basis for its motion but, since section 1008 is the only statutory avenue through which a party may ask the court to revisit a previously decided motion, the Court will treat Palmchip’s “renewed” motion as a motion for renewal under Code of Civil Procedure section 1008, subdivision (b).

A.           Legal Standard

Section 1008 of the Code of Civil Procedure is the exclusive means for a party to call upon a court to revisit interim rulings. (See Code Civ. Proc. [“CCP”], § 1008, subd. (e); see also Standard Microsystems Corp. v. Winbond Electronics Corp. (2009) 179 Cal.App.4th 868, 885.) The Code section provides for two types of motions: (1) motions for reconsideration, and (2) motions for renewal.

Motions for reconsideration are governed by CCP section 1008, subdivision (a), which requires that any such motion be (1) filed “within 10 days after service upon the party of written notice of entry of the order” of which reconsideration is sought, (2) supported by new or different facts, circumstances or law, and (3) accompanied by an affidavit detailing the circumstances of the first motion and the respects in which the new motion differs from the first. (CCP, § 1008, subd. (a).)

Motions for renewal are governed by CCP section 1008, subdivision (b), which echoes the requirements for motions for reconsideration with the exception that motions for renewal are not subject to the 10-day time limit. The provision provides that “[a] party who originally made an application for an order which was refused in whole or part . . . may make a subsequent application for the same order upon new or different facts, circumstances, or law.” (CCP, § 1008, subd. (b).)

For both types of motions, the moving party must present “a satisfactory explanation for failing to provide the evidence earlier, which can only be described as a strict requirement of diligence.” (See Garcia v. Hejmadi (1997) 58 Cal.App.4th 674, 690.) According to the plain language of the statute, a court acts in excess of its jurisdiction when it grants a motion to reconsider or renew that is not based upon new or different facts, circumstances, or law. (CCP, § 1008, subd. (e) [“This section specifies the court’s jurisdiction with regard to applications for reconsideration of its orders and renewals of previous motions, and . . . [n]o application to reconsider any order or for the renewal of a previous motion may be considered by any judge or court unless made according to this section.”]; see also Gilberd v. AC Transit (1995) 32 Cal.App.4th 1494, 1500.)

               B.           Defendants’ Motion for Reconsideration

On 20 February 2014, Palmchip filed several discovery motions, including a motion to have its requests for admissions (“RFAs”) deemed admitted on the ground that Defendants had not provided Palmchip with verified responses to the RFAs. The hearing on the motion took place on 14 March 2014.

On 9 June 2014, the Court entered an order on the motions in which it, among other things, granted Palmchip’s motion to have its RFAs deemed admitted. In granting the motion, the Court first noted that CCP section 2033.280, subdivision (c) required the Court to grant the motion unless, prior to the hearing on the motion, Defendants served a proposed response that is substantially code-compliant. (June 9 Order, at p. 4.) Based upon the finding that “it does not appear that any verifications [for the responses to the RFA] have yet been supplied” (id., at p. 2), the Court ruled that Defendants had not served substantially code-compliant responses prior to the hearing and that the Court was therefore required to grant the motion. (Id., at p. 5, [“Given that there is no indication that Defendants have served a proposed response that is in substantial compliance with the CCP, the Court must grant Palmchip’s motion to deem the RFAs admitted.”].)

On 24 June 2014, Defendants filed the motion presently before the Court, seeking reconsideration of the June 9 Order under CCP section 1008, subdivision (a). Palmchip filed an opposition to the motion on 14 July 2014, and Defendants filed their reply brief on 18 July 2014.

In their motion, Defendants contend that the Court’s finding concerning the lack of verifications is inaccurate. More specifically, Defendants assert that, on 6 March 2014, after they had filed their opposition to Palmchip’s motions but before the 14 March 2014 hearing on the matter, they served Palmchip with verifications for the RFA. Defendants further point out that, on 12 March 2014, they filed the verifications with the Court as part of their opposition to Palmchip’s evidentiary objections associated with the discovery motions. Based upon these facts, Defendants argue that the Court’s finding that the verifications had not been served prior to the 14 March 2014 hearing is inaccurate and that the Court was required to deny Palmchip’s motion to deem the RFA admitted under CCP section 2033.280, subdivision (c).

As a threshold matter, the fact relied upon by Defendants is not a new or different fact within the meaning of section 1008. Indeed, Defendants quote the transcript from the 14 March 2014 hearing in which defense counsel specifically addressed the fact that the verifications had been provided prior to the hearing. Essentially, Defendants are not claiming that there are new facts warranting a different outcome, but simply that the Court got the facts wrong. This is not a proper basis to bring a motion under Code of Civil Procedure section 1008.

Because Defendants have not presented new or different facts within the meaning of section 1008, the Court lacks jurisdiction to consider Defendants’ motion. (Gilberd, supra, 32 Cal.App.4th at p. 1500.) Consequently, Defendants’ motion for reconsideration is DENIED.

Anticipating that the Court might deny the motion for reconsideration under CCP section 1008, Defendants also point out that the Court has inherent authority to reconsider and modify a prior order where the order was based upon a recognized error. On this point, Defendants are correct. While CCP section 1008 imposes a jurisdictional limitation on a party’s ability to file repetitive motions, it does not limit the Court’s inherent authority to reconsider a prior interim ruling on its own motion. (Le Francois v. Goel (2005) 35 Cal.4th 1094, 1105.) Indeed, the California Supreme Court has indicated that “[f]orcing the parties to proceed where there is a recognized error in the case would result in an enormous waste of the court’s and the parties’ resources.” (Id., at p. 1106-1107.)

Palmchip opposes Defendants’ suggestion that the Court should reconsider the June 9 Order sua sponte. Palmchip’s opposition is somewhat surprising given that it does not contest the fact that the verifications were served prior to the 14 March 2014 hearing or the fact that Defendants supplied the verifications to the Court prior to the March hearing. Notwithstanding these facts, Palmchip opposes the Court’s reconsideration on the ground that the verifications supplied to the Court prior to the hearing were never properly authenticated. (Pl.’s Opp. to Def.s’ Mot. for Reconsideration, p. 4.) According to Palmchip, to be considered by the court, a writing must be authenticated by declarations or other evidence “sufficient to sustain a finding that it is the writing that the proponent of the evidence claims it is.” (Id., at p. 4, quoting Serri v. Santa Clara University (2014) 226 Cal.App.4th 830, 855.) Because the verifications supplied to the Court were not properly authenticated, Palmchip asserts that they are inadmissible and not a basis for the Court to reconsider its prior ruling.

Palmchip’s argument on this issue is not well-taken. None of the authorities cited by Palmchip apply to discovery motions. For instance, Palmchip quotes Weil and Brown as stating that “[d]iscovery responses are not admissible unless authenticated.” (Pl.’s Opp., at p. 4, quoting Weil & Brown, California Practice Guide: Civil Procedure Before Trial (Rutter Group 2012) at 9:50.) The quotation is accurate, but it does not stand for the proposition cited. The quotation comes from the chapter in the practice guide relating to law and motion hearings on dispositive matters—not the chapter governing discovery motions. In making the quoted statement, the practice guide is pointing out that dispositive motions (such as motions for summary judgment) are frequently based on answers obtained through discovery.

Because evidence filed in support of a motion for summary judgment must be admissible, the practice guide is simply pointing out that, when discovery responses are used in support of a dispositive motion, they are not admissible unless properly authenticated. (See Serri, supra, 226 Cal.App.4th at p. 855 [“Documents obtained in discovery in response to a request for production of documents may be used to support or oppose a motion for summary judgment, but must be presented in admissible form.”) Palmchip has cited no authority for the proposition that the Court may not consider the verifications for the purpose of ruling on a motion to deem RFAs admitted unless the verifications are properly authenticated.

Given the impact that admissions can have on a case, on its own motion, the Court has taken a second look at the record to see whether the factual findings relied upon to grant Palmchip’s motion to deem the RFAs admitted were accurate. Upon further review, the Court found that Defendants did in fact supply the verifications prior to the 14 March 2014 hearing. Accordingly, because Defendants had served Palmchip with the verifications prior to the 14 March 2014 hearing, Palmchip’s motion to have the RFAs deemed admitted should have been denied.

Based upon the above discussion, on the Court’s own motion, the June 9 Order granting Palmchip’s motion to deem the RFAs admitted shall be modified as follows: Because Defendants served Palmchip with responses to the RFA that are in substantial compliance with CCP section 2033.220 prior to the 14 March 2014 hearing, Palmchip’s motion to deem the RFAs admitted is DENIED. The remainder of the June 9 Order, including the imposition of monetary sanctions against Defendants in connection with Palmchip’s motions remains unmodified.

               C.           Palmchip’s “Renewed” Motion

On 20 February 2014, in addition to its motion to deem RFAs admitted, Palmchip filed a “Motion to Compel Responses and Production” to its first set of requests for production of documents (“RPD”). In the Notice of Motion, Palmchip indicated that it would “move th[e] Court for an Order compelling Defendants to provide full and complete, and properly verified responses without objections to each of Plaintiff’s [RPD].” (Pl.’s Notice of Mot. to Compel Responses and Production, filed 20 Feb. 2014.)

The Notice of Motion further indicated that the motion was made pursuant to CCP section “2031.310 et seq., on the grounds that (1) Defendants’ [sic] have served only unverified responses to this discovery (which are tantamount to no substantive responses at all) and the objections raised are nothing but specious and meritless boilerplate objections; [and] (2) . . . Defendants have failed to provide full and complete, properly-verified responses.” (Id.) In the memorandum in support of the motion, Palmchip concluded by stating the following: “For the reasons set forth above, Palmchip respectfully requests that the Court issue an Order compelling Defendants to provide full and complete, properly-verified responses and production to Palmchip’s [RPD] without reference to any objections.” (Pl.’s Mem. of Ps & As in Support of Motion to Compel Reponses and Production, filed 20 Feb. 2014, at p. 21.)

On 13 March 2014, the Court posted a tentative ruling on Palmchip’s motion. In the tentative ruling, the Court pointed out that Palmchip’s motion was confusing because, while Palmchip repeatedly requested initial verified responses from all of the defendants, it cited CCP section 2031.310, which applies to motions for further responses. The Court further noted that, while the caption to the motion suggested that Palmchip sought an order compelling the production of additional documents, the notice of motion and memorandum of points and authorities did not contain such a request. Finally, the Court noted that Palmchip’s separate statement only set forth one of the defendants’ responses. Based upon these findings, the Court indicated in the tentative ruling that it would treat Palmchip’s motion as a motion to compel initial verified responses as to all of the defendants pursuant to CCP section 2031.300.

On 14 March 2014, during the hearing on the motion, Palmchip pointed out that it had filed an errata to its notice of motion on 21 February 2014. The errata indicated that Palmchip was moving not only for properly verified responses without objections, but also for the production of documents responsive to the RPD. The errata also indicated as one of the grounds for the motion that “Ralink Taiwan’s prior production of documents is deficient.” During the hearing, the Court indicated that it had not been aware of the errata and took the matter under submission.

On 9 June 2014, the Court entered its order on Palmchip’s motion. The June 9 Order is consistent with the tentative ruling, treating the motion as one to compel initial responses, and ordering all Defendants to serve initial verified responses to the RPD. Also, consistent with the tentative ruling, the Court indicated in the June 9 Order that the request for production was premature. The June 9 Order does not expressly reference the errata.

On 2 July 2014, Palmchip filed the present motion, which is styled as a “Renewed Notice of Motion and Motion to Compel Production From Defendant Taiwan Corporation Ralink Technology Corporation in Response to Plaintiff’s Request for Production of Documents (Set One).” On the first page of Palmchip’s memorandum in support of the motion, Palmchip states that

“[t]his Motion renews the Motion to Compel Production of Documents filed by Plaintiff . . . on February 20, 2014, heard and taken under submission on March 14, 2014, and denied in substantial part on June 8, 2014 as not having been properly before the Court.” (Pl.’s Renewed Mot. to Compel, p. 1.)

The gist of the motion, which is further elaborated on in Palmchip’s opposition to Defendants’ motion for reconsideration, is that the Court failed to consider the errata, which, according to Palmchip, made clear that Palmchip was seeking to compel the production of documents from Ralink Taiwan.

Defendants filed an opposition to the “renewed” motion on 14 July 2014. Palmchip filed a reply brief on 18 July 2014.

As an initial matter, Palmchip does not cite CCP section 1008 as the statutory basis for its motion. However, as indicated above, the only way in which a previously decided motion may be renewed is through CCP section 1008, subdivision (b), which echoes the requirements for motions for reconsideration with the exception that motions for renewal are not subject to the 10-day time limit. (CCP, § 1008, subd. (b).)

The fact that the Court did not mention the errata in the June 9 Order does not constitute a new or different fact that would provide a basis to renew the motion under CCP section 1008, subdivision (b). Palmchip brought the errata to the Court’s attention during the hearing and the Court considered it. Notwithstanding the filing of the errata, as the Court pointed out in the June 9 Order, Palmchip’s original motion to compel production expressly sought relief from all Defendants on the basis that they had not served verified initial responses.

Thus, the Court properly construed the motion as one to compel initial responses from all Defendants and denied the request to compel production on two bases: first, because Defendants had not served initial responses, a motion to compel further responses would have been premature; and second, Palmchip had only filed a separate statement with regard to Ralink Taiwan. Put simply, Palmchip has not supplied the Court with new or different facts warranting the renewal of their motion to compel.

Palmchip and Ralink Taiwan have both supplied the Court with separate statements addressing the propriety of Ralink Taiwan’s objections to Palmchip’s RPD. Under ordinary circumstances, where a moving party has mischaracterized the nature of a motion or cited to the wrong Code provision, if it is clear from the papers the nature of the relief being sought and the parties have supplied the Court with enough information to rule on the matter, the Court would be inclined to evaluate the merits of the motion under the proper Code section. The Court is not inclined to do so in this case for the two reasons set forth below.

First and foremost, Palmchip’s motion is styled as a “renewed” motion, which, as discussed above, is not properly before the Court. The Court made clear in the June 9 Order that it was construing Palmchip’s motion as one for initial responses. It also made clear that, because Defendants had not yet served verified responses to the RPD, the 45-day time limit concerning motions to compel further responses had not been triggered. Given the statements during the 14 March 2014 hearing and in the Court’s June 9 Order, Palmchip very easily could have simply noticed a motion to compel Ralink Taiwan to provide further responses to the RPD. It chose not to do so, and instead filed a “renewed” motion.

The parties have made the Court aware that, in addition to the present action, they are also engaged in a related patent infringement case that Palmchip filed in the United States District Court for the Central District of California. Given the existence of the parallel cases, and the fact that the parties have failed to cite the proper statutory authority on more than one occasion on discovery matters in this case, the Court would like to remind the parties that the rules governing discovery disputes in federal court and California state court are quite different. Discovery disputes in federal court are governed by rules 26 through 37 of the Federal Rules of Civil Procedure, which are relatively limited in scope—particularly as to the procedures for compelling compliance with discovery requests.

In California state court, however, the California Legislature has set forth very detailed rules governing discovery and any ensuing discovery disputes. The parties are advised to become more familiar with these rules.

In its notice of the renewed motion, Palmchip cites CCP section “2031.310 et seq.” as the statutory basis for its motion. The “et seq.” essentially renders the notice meaningless. Chapter 14 of the Civil Discovery Act governs inspection demands, which includes document requests, and encompasses sections 2031.010 through 2031.510. The chapter includes three types of motions to compel, two of which would fall within Palmchip’s designation of “2031.310 et seq.”

As the Court noted in the June 9 Order, CCP section 2031.300 authorizes motions to compel initial responses. That section is applicable where a responding party fails to provide initial verified responses, which was the situation when Palmchip filed its original motion to compel. Once a responding party has served verified responses, CCP section 2031.310 authorizes motions to compel further responses where the propounding party believes that (1) a statement of compliance with the request is incomplete, (2) a representation of an inability to comply with the request is inadequate, or (3) an objection to the request lacks merit. (CCP, § 2031.310, subd. (a)(1)-(3).)

Motions to compel further responses must set forth good cause, be accompanied by a meet and confer declaration, and must be filed within 45 days of the service of the verified response or any supplemental verified response. (CCP, § 2031.310, subd. (b) and (c).) Finally, CCP section 2031.320 authorizes motions to compel compliance and is applicable in situations where the responding party has indicated that it will produce documents but has failed to do so. Unlike motions to compel further responses, there is no time limit within which a party must file a motion to compel compliance.

Given the detailed rules set forth in Chapter 14 of the Civil Discovery Act, it is improper to generally style a motion as one to “compel production” pursuant to “section 2031.310 et seq.” without referencing the particular section relied upon and the specific relief requested (i.e., initial responses, further responses (which implicitly includes the production of documents responsive to requests for which meritless objections are overruled), or the production of documents in compliance with a responding party’s statement of compliance).

The second reason the Court will not be addressing the merits of the objections is because Palmchip has recently filed a motion to have this case designated complex and transferred to the Complex Litigation Department. Palmchip’s motion is set to be heard on 1 August 2014. If the motion is granted and the case is transferred to the Complex Litigation Department, this Department will no longer hear the parties’ discovery disputes. Moreover, the procedures for resolving discovery disputes in complex cases are different from those applicable in the non-complex context. Given these considerations, the Court generally agrees with Ralink Taiwan that it makes sense from a practical standpoint to wait one week and see if the case it transferred.[2]

Based upon the above discussion, Palmchip’s renewed motion to compel production is DENIED.

               D.           Request for Monetary Sanctions

In connection with its renewed motion to compel production, Palmchip requests the imposition of monetary sanctions against Defendants and their counsel in the amount of $3,450. Palmchip cites CCP section 2030.310, subdivision (h) as the basis for its motion. This appears to be a clerical error. Section 2030.310 authorizes the service of amended answers to interrogatories and does not contain a subdivision (h). Section 2031.310, however, does contain a subdivision (h) and authorizes monetary sanctions. The section provides that “the court shall impose a monetary sanction . . . against any party, person, or attorney who unsuccessfully makes or opposes a motion to compel further response to a demand, unless it finds that the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust.” (CCP, § 2031.310, subd. (h).)

Palmchip did not successfully make a motion to compel further responses. Consequently, it is not entitled to an award of monetary sanctions and the request is therefore DENIED.

II.            Defendants’ Motion for an Order Requiring Palmchip to Abide by the Parties’ Protective Orders

Defendants ask the Court to enter an order requiring Palmchip to abide by the parties’ protective orders in this case, which prohibit confidential information produced in this action from being used in any other action, including a pending federal patent infringement action between the same parties. Defendants also ask the Court to sanction Palmchip in the amount of $20,000 for using documents produced in this case under the parties’ protective orders to support its patent infringement claims in the federal action.

               A.           Facts Giving Rise to the Motion

In January 2013, approximately three months after Palmchip filed this action in October 2012, the parties entered into settlement discussions to resolve the case without protracted litigation. As part of the settlement negotiations, the parties agreed to exchange materials on a confidential basis and, on 22 January 2013, counsel for Defendants provided counsel for Palmchip several documents concerning the products at issue in this case. (Decl. of Heather Auyang in Support of Def.s’ Mot. for an Order Prohibiting Pl.’s Misuse of Confidential Information (“Decl. of Auyang”), Ex., JJ.) The letter accompanying the documents indicated that the documents are confidential and being disclosed for settlement discussions only pursuant to Rule 408 of the Federal Rules of Evidence and California Code of Civil Procedure section 1152. (Id.) Counsel for Defendants also supplied the documents via email.

On 1 February 2013, after Palmchip requested additional documents for purposes of settlement negotiation, Defendants’ counsel sent another email to Palmchip’s counsel, attaching additional technical documents related to the products. The email identified the documents as “privileged and confidential” and for “settlement purposes only” pursuant to Rule 408 of the Federal Rules of Evidence and California Code of Civil Procedure section 1152. (Decl. of Auyang, Ex. KK.)

In April 2013, the parties submitted to the Court a proposed stipulated protective order (the “Settlement Protective Order”), which authorized the designation of materials as either “CONFIDENTIAL or HIGHLY CONFIDENTIAL – SOURCE CODE.” (Id., ¶ 3.) The Settlement Protective Order provides that it “shall govern specific Confidential Information . . . to be produced by Defendant for the sole purpose of engaging in settlement discussions . . . [and that] [a]ny Confidential Information produced pursuant to th[e] Protective Order shall be for settlement purposes only, and subject to Federal Rules of Evidence 408 and/or Cal. Evid. Code §§ 1152 et al.” (Id., Ex. A.) The Settlement Protective Order further provides that it may be modified only by “further order of this Court or by subsequent written agreement of the Producing Party.” (Id.)

The Court approved and entered the Settlement Protective Order as an order of the Court on 2 May 2013.

In October 2013, the parties submitted to the Court a second proposed stipulated protective order (the “Discovery Protective Order), which provides for the designation of materials disclosed during discovery as “CONFIDENTIAL.” (Id., Ex. B.) Paragraph 7.1 of the Discovery Protective Order provides that “[a] Receiving Party may use Protected Material that is disclosed or produced by another Party or by a Non-Party in connection with this case only for prosecuting, defending, or attempting to settle this litigation.” (Id., ¶ 7.1.) Like the Settlement Protective Order, the Discovery Protective Order provides that the order may only be modified by “further order of this Court or by subsequent written agreement of the Producing Party.” (Id., ¶ 7.2(a).)

The Discovery Protective Order also provides a two-step process for resolving disputes over confidentiality designations. (Id., ¶¶ 6.1 – 6.3.) First, the party objecting to a designation must provide “written notice of each designation that it is challenging and . . . attempt to [informally] resolve each challenge in good faith . . . .” (Id., ¶ 6.2.) Second, “[i]f the Parties cannot resolve a challenge without court intervention,” the designating party may file a motion to retain the confidentiality of the document or the challenging party may file a motion challenging the confidentiality designation. (Id., ¶ 6.3.)

The Court approved and entered the Discovery Protective Order as an order of the Court on 20 November 2013.

In August 2013, Palmchip filed a patent infringement action against Defendants in the United States District Court for the Central District of California. (Case No. EDCV 13-01567 MRP (SPx) (the “Federal case”).) In the Federal case, Palmchip asserts that 82 of Defendants’ products (the “Accused Products”) infringed three of Palmchip’s patents.

As the first step in the patent litigation process, Palmchip was required to serve its infringement contentions on Defendants by 19 May 2014, which required the identification of where and how each element of each asserted claim is found in the Accused Products.

On 13 May 2014, counsel for Palmchip wrote a letter to counsel for Defendants, seeking to confirm that the parties had stipulated to the use in the Federal case of documents and source code produced in the state court case. (Decl. of Auyang, Ex. E.)

On 14 May 2014, counsel for Defendants responded to Palmchip’s counsel’s letter, stating the following:

You have mischaracterized what occurred at the [case management conference in the Federal case]. There is no stipulation at this time that Palmchip can use discovery from the state court case in the patent case.

. . . . Any Attempt to use what has been produced in the state court action will be a violation of the state court protective orders that we entered. (Id., Ex. F.)

Counsel for Palmchip responded the next day, stating that “there is and was a stipulation on the record that discovery produced in the state court case can be utilized in the federal case.” (Id., Ex. G, emphasis in original.)

On 16 May 2014, counsel for Defendants responded, stating the following:

Defendants have never agreed to modify the Protective Order or agreed that Palmchip could use the source code produced for settlement purposes to prepare its infringement contentions . . . . The source code Defendants produced was for use in settlement only. The terms of the Protective Order that governed the production of code are still in effect. (Id., Ex. H.)

Defense counsel also pointed out that paragraph 21 of the Settlement Protective Order required the return of all confidential information at the conclusion of the settlement discussions and that “Palmchip should no longer have any copies of the source code in its possession as the last scheduled mediation ended in January 2014.” (Id.)

On 19 May 2014, Palmchip served Defendants with its infringement contentions in the Federal case. The contentions are supported by exhibits, at least two of which were produced by Defendants in the state court case. According to Defendants, the documents were produced pursuant to the parties’ Discovery Protective Order in the state court case, designated as confidential, and bore Bates stamp numbers. The exhibits attached to the infringement contentions, however, were not marked confidential or Bates stamped. (Compare Decl. of Auyang, Ex. J to Decl. of Auyang, Ex. K.)

On 28 May 2014, in response to Defendants’ position that Palmchip’s initial infringement contention charts in the Federal case were inadequate, Palmchip served amended infringement contentions. The amended infringement contentions were supported by additional documents that had been disclosed by Defendants in the state court case pursuant to the parties’ protective orders. Like the initial infringement contentions, the documents attached to the amended infringement contentions did not bear confidentiality designations or Bates stamp numbers.

On 9 June 2014, Palmchip filed a motion for leave to amend its complaint in the Federal case. In support of the motion, Palmchip attached an email that had been produced by Defendants in the state court case and designated confidential pursuant to the Discovery Protective Order. The motion (and the attached email) was filed on the federal court’s electronic docketing system, which is available to the public.

On 2 July 2014, following additional meet and confer communications, Defendants filed the present motion, which is entitled “Motion for an Order Prohibiting Plaintiff’s Misuse of Confidential Information and for Sanctions.”

Palmchip filed an opposition to the motion on 14 July 2014, and Defendants filed their reply on 18 July 2014.

               B.           Analysis

In their motion, Defendants seek two forms of relief. First, they ask the Court to enter an order declaring that “Palmchip is required to abide by the Protective Orders in this action, which prohibits confidential information produced in this action from being used beyond this action, including a pending federal court action between the same parties.” (Def.s’ Notice of Mot., at p. i.) Second, Defendants ask the Court to impose monetary sanctions against Palmchip and its counsel in the amount of $20,000 for violating the two protective orders.

                              1.            Declaratory Relief

Defendants cite CCP section 2031.060 as the statutory basis for their motion for an order declaring that Palmchip must abide by the two protective orders entered in this case. Section 2031.060 authorizes the entry of protective orders in connection with inspection demands and provides, in pertinent part, that “[t]he court, for good cause shown, may make any order that justice requires to protect any party or other person form unwarranted annoyance, embarrassment, or oppression, or undue burden and expense.” (CCP, § 2031.060, subd. (a).) Protective orders entered under CCP section 2031.060 “may include, but [are] not limited to, [an order] . . . [t]hat a trade secret or other confidential research, development, or commercial information not be disclosed, or be disclosed only to specified persons or only in a specified way.” (CCP, § 2031.060, subd. (b)(5).)

As an initial matter, CCP section 2031.060 does not provide a statutory basis for the first form of relief sought by Defendants. As indicated above, the section provides for the entry of a protective order—not an order enforcing or requiring a party to abide by previously entered protective orders. Moreover, the requested relief is wholly unnecessary. Both of the protective orders contain provisions that they cannot be modified without written agreement or approval from this Court.

Thus, even if Palmchip’s assertion that the parties orally stipulated to the use of the discovery produced in this case for use in the Federal case, pursuant to the terms of the protective orders, they would first need to seek approval from this Court. Along the same lines, if Defendants believe that Palmchip has violated the protective orders, then the appropriate remedy is to seek monetary sanctions, which they have done in this case, or to initiate contempt proceedings. (Westinghouse Elec. Corp. v. Newman & Holtzinger, P.C. (1995) 39 Cal.App.4th 1194, 1205 [indicating that the appropriate remedy for the violation of a stipulated protective order is to initiate contempt proceedings for violation of a court order].)

In sum, Defendants are essentially seeking a protective order declaring that Palmchip must comply with the terms of earlier protective orders. Such relief is unnecessary and unauthorized under CCP section 2031.060. Consequently, Defendants’ motion for an order declaring that Palmchip must abide by the parties’ protective orders is DENIED.

                              2.            Monetary Sanctions for Violation of the Protective Orders

Defendants also seek the imposition of monetary sanctions against Palmchip and its counsel in the amount of $20,000 for the alleged violation of the two protective orders entered in this case. Defendants cite CCP sections 2023.010, 2023.030, and 177.5 as the statutory bases for their motion.

As an initial matter, the Code sections cited by Defendants do not provide a basis for the relief requested. Under CCP section 2023.040, a notice of motion for sanctions is required 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].)

Turning to the Code sections cited by Defendants, CCP 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 is also cited by Defendants, 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. Here, Defendants have not cited any underlying provision applicable to the discovery requests at issue. Thus, section 2023.030 does not provide a basis for the requested relief.

The other Code section cited by Defendants, CCP section 177.5, authorizes the imposition of monetary sanctions “for any violation of a lawful court order by a person done without good cause or substantial justification.” However, such sanctions are “not to exceed fifteen hundred dollars” and are payable to the Court. (CCP, § 177.5.) Thus, while Defendants may seek the imposition of monetary sanction under CCP section 177.5, the section does not authorize Defendants’ request for $20,000.

Moving to the merits of whether Palmchip violated either of the protective orders, Defendants have filed thousands of pages of documents in support of their motion. The documents consist of discovery produced by Defendants after the entry of the two protective orders, which are Bates stamped and marked “CONFIDENTIAL,” and the exhibits used by Palmchip in the Federal case, which are the same documents, but are not Bates stamped and are not marked “CONFIDENTIAL.” Based upon a comparison of the documents, Defendants assert that Palmchip has de-designated confidential materials in violation of the protective orders.

In opposition to the motion, counsel for Palmchip unequivocally declares that he “did not, in any circumstance, remove any bates stamps or confidentiality designation form any document in preparing [the exhibits for the Federal case].” (Decl. of Joshua Hodas in Opp. to Mot. for Sanctions, ¶ 4.) Rather, Palmchip asserts that it obtained some of the documents it used in the Federal case from publicly available websites on the Internet. As further indicia that Palmchip did not “de-designate” confidential documents, Palmchip points out that the documents produced during discovery were black-and-white, while the documents used in the Federal case were color copies.

Palmchip does not make clear where the documents came from that it used in the Federal case that it did not find on publicly available websites. It appears that Palmchip may have used documents that were supplied as part of the parties’ settlement negotiations. Indeed, Defendants confirm that many of the documents that were produced as part of the parties’ settlement negotiations in January of 2013 were produced a second time pursuant to the two protective orders. Palmchip expressly states in its opposition, however, that it “does not concede that these [documents] were the copies used by Palmchip to prepare its exhibits to its infringement contentions.” (Palmchip’s Opp. to Def.s’ Mot. for Sanctions, p. 6 n. 6.)

In their reply brief, Defendants contend that Palmchip has essentially confirmed in its opposition papers that it has violated the settlement and mediation privileges codified in Evidence Code sections 1119 (mediation privilege) and 1152 (settlement negotiation privilege). The question of whether Palmchip has violated the settlement or mediation privileges, however, is not before the Court. The issue raised in Defendants’ motion is whether Palmchip should be sanctioned for violation of the Settlement Protective Order and the Discovery Protective Order. The question of whether the documents produced prior to the entry of the protective orders are privileged is a separate issue. Accordingly, for the purposes of this discussion, the Court is only concerned with whether Palmchip has violated either of the two orders.

As to all but one of the documents at issue,[3] Palmchip claims that it used versions of the documents that it found or that were made available to it prior to the entry of the protective orders. Defendants have not shown otherwise. Thus, as to those documents, Defendants have not demonstrated that Palmchip violated the protective orders.

The only remaining document at issue is the email produced by Defendants that Palmchip used in support of its motion to amend its complaint in the Federal case. According to Defendants, the email in question was produced twice during the course of discovery. The email was originally produced (along with other emails and attachments) as a PDF file and designated confidential pursuant to the Discovery Protective Order. The email in question was labeled “confidential” and Bates stamped “RL000023.” (Decl. of Auyang, Ex. EE.) When Palmchip claimed that the email threads produced as PDFs were “corrupt,” Defendants produced the native emails and their attachments on a compact disc (“CD”). The CD was produced along with a cover letter. (Id., Ex. FF.) In the cover letter, defense counsel stated the following:

[P]lease find enclosed a CD containing Defendants’ supplement to the first production of documents and bates-stamped RL007906-RL008244. Please note that documents have been designated “CONFIDENTIAL” pursuant to the Protective Order that the parties will enter into for this matter. (Id.)

Palmchip asserts that the CD itself was not marked confidential. Palmchip also directs the Court to the language of the cover letter. According to Palmchip, because the cover letter states “that documents have been designated” rather than “the documents” or “all of the documents,” the email in question was not properly designated as confidential pursuant to the parties’ protective order.

Palmchip’s argument is not well taken. The email was originally designated confidential. The cover letter concerning the CD indicates that the documents contained therein are confidential. Given these facts, the Court finds Palmchip’s argument concerning the absence of the word “the” in the cover letter unpersuasive.

Based upon the above discussion, the Court finds that Palmchip was required to seek relief from this Court prior to using the email Bates stamped RL000023 in the Federal case. Because it failed to do so, it violated the Discovery Protective Order.

                              3.            Conclusion

Defendants’ motion is GRANTED IN PART and DENIED IN PART. Defendants are not entitled to a declaration from the Court that Palmchip must abide by the Settlement Protective Order entered on 2 May 2013 or the Discovery Protective Order entered on 20 November 2013. Similarly, Defendants have cited no authority authorizing an award of monetary sanctions in the amount of $20,000 for the violation of a court order. Defendants have demonstrated, however, that Palmchip violated the protective orders by filing a document in the Federal case that had been designated as confidential in this action. Accordingly, Palmchip shall be required to pay to the Court $1,500 for the violation of the Discovery Protective Order.

               C.           Palmchip’s Request for Monetary Sanctions

In its opposition to Defendants’ motion for an order requiring Palmchip to abide by the protective orders, Palmchip seeks monetary sanctions against Defendants in the amount of $19,830. Palmchip cites CCP section 2023.030, subdivision (a) as the basis for its request. As discussed above, CCP section 2023.030 does not provide an independent basis for an award of monetary sanctions. Accordingly, because Palmchip has failed to cite a statutory basis for its request, the request is DENIED.

Conclusion and Order

Defendants’ motion for reconsideration of the Court’s June 9 Order is DENIED.

On the Court’s own motion, the June 9 Order granting Palmchip’s motion to deem the RFAs admitted shall be modified as follows: Because Defendants served Palmchip with responses to the RFA that are in substantial compliance with CCP section 2033.220 prior to the 14 March 2014 hearing, Palmchip’s motion to deem the RFAs admitted is DENIED. The remainder of the June 9 Order, including the imposition of monetary sanctions against Defendants in connection with Palmchip’s motions remains unmodified.

Palmchip’s renewed motion to compel production is DENIED.

Palmchip’s request for monetary sanctions in connection with its renewed motion to compel production is DENIED.

Defendants’ motion for an order prohibiting Palmchip’s misuse of confidential information and for sanctions is GRANTED IN PART and DENIED IN PART. The motion is GRANTED as to Defendants’ request for monetary sanctions under CCP section 177.5 for Palmchip’s violation of a previous order. The motion is otherwise DENIED. Accordingly, Palmchip shall pay to the Court $1,500 within 20 calendar days of the filing of this Order.

Palmchip’s request for monetary sanctions in connection with Defendant’s motion for an order prohibiting the misuse of confidential information is DENIED.