Opinion
4:20-cv-03127
06-11-2024
Automated Layout Technology, LLC v. Precision Steel Systems, LLC, Nicholas Donner, and Donner Steel Works, Inc.
Craig R. Smith, LANDO & ANASTASI, LLP, Counsel for Plaintiff.
Craig R. Smith, LANDO & ANASTASI, LLP, Counsel for Plaintiff.
Michael D. Nelson, United States Magistrate Judge.
Dear Judge Nelson:
We represent Plaintiff Automated Layout Technology, LLC (“ALT”) and write in response to Defendants' letter of June 7, 2024. ALT manufactures and sells its patented LIGHTNING RAIL® machine. Defendant Precision Steel Systems, LLC (“PSS”) is ALT's only competitor. PSS has admitted that its “PLS-624” machine infringes U.S. Patent No. 11,416,826.
Fact discovery closed over a year ago on May 12, 2023. Defendants' request for written communications with customers and potential customers is untimely, overly broad and unduly burdensome, and would have the effect of further extending the deadlines in the Fifth Amended Case Progression Order. ECF No. 237. If Defendants' request is granted, they will seek an extension of their July 1, 2024 rebuttal expert report deadline pending ALT's review of all its emails. That would necessitate a Sixth Amended Case Progression Order and further delayed resolution of this case. This case has been pending since 2020 and delayed because of PSS's unsuccessful reexaminations in the U.S. Patent and Trademark Office. The time has come to move this case forward to trial and resolution.
ALT has already produced emails and sales proposals for customers or potential customers that ALT lost to PSS. Defendants want ALT to produce emails with approximately 150 non-PSS customers, approximately 500 sales proposals, and emails with an even larger, unknown number of potential customers who were previously or currently are in communication with ALT but did not or have not reached the sales proposals stage. Considering that each customer or potential customer may have had multiple email communications with ALT over a lead time of several years, this would require ALT to review all its emails, which is unreasonable.
Defendants' Late Discovery Requests Have Been Endless
Five months ago, ALT voluntarily agreed to provide “limited” additional discovery in a good faith effort to avoid a dispute with Defendants. ECF No. 222 (filed Jan. 11, 2024). Defendants also agreed their requests would be “limited” in nature. However, the requests have been endless.
Beginning with a letter dated February 28, 2024, Defendants demanded a total of 34 interrogatories and requests for production be supplemented. Defendants also demanded witnesses on 35 topics in their Rule 30(b)(6) notice. Defendants went so far as to specify which persons they wanted designated as Rule 30(b)(6) witnesses. Later, Defendants requested that supplemental production of financial documents be completed by May 30, 2024, a deadline that ALT met a week early.
ALT Has Timely Complied with All Reasonable Requests for Supplementation
Over the past five months, ALT has provided the following additional discovery at Defendants' request:
• “Plaintiff's Third Supplemental Initial Disclosures” (March 29, 2024);
• “Plaintiff and Third-Party Counterdefendants' Supplemental Responses and Objections to Defendants' Second Set of Interrogatories” (April 3, 2024);
• Supplemental document production Bates numbers ALT-004089 to ALT-004184 (April 5, 2024);
• First Rule 30(b)(6) deposition of ALT on May 2, 2024 (pursuant to Defendants' request, ALT designated its owner and co-inventor of the Patents-in-Suit, Mr. Chasse);
• Second Rule 30(b)(6) deposition of ALT on May 3, 2024 (pursuant to Defendants' request, ALT designated the other co-inventor of the Patents-in-Suit, Mr. Evans); and
• Supplemental document productions Bates numbers ALT-004185 to ALT-004619 (May 14, 2024; May 22, 2024; May 23, 2024).
ALT Has Already Produced Documents Responsive to Request for Production No. 8
ALT has already produced documents responsive to Request for Production No. 8 (“All written communications between you and any customer or potential customer who has purchased or at some point considered purchasing the Lightning Rail.”). Indeed, Defendants' letter admits that ALT recently produced relevant emails and sales proposals. PSS now requests an undefined number of additional emails and sales proposals, without any acknowledgement of the undue burden on ALT.
During the period of “limited” discovery, ALT tailored its document production to customers or potential customers that the parties have in common. This is a reasonable approach on the facts of this case. ALT's LIGHTNING RAIL® is a high-cost, low-volume product where even a single lost sale causes ALT to incur significant loss. PSS has made relatively few sales (in part due to documented market perception that PSS sells a “counterfeit” machine). ALT's lost profit damages include six sales made by PSS.Of those six sales, four of those customers were in active sales negotiations with ALT when PSS converted them to its infringing machine. ALT has already produced relevant emails and sales proposals related to these sales.
ALT is aware of a total of eight infringing PLS-624 machines, two of which were used, offered for sale, and/or sold in non-arms-length transactions and also subject to lost profit damages.
Defendants, however, want ALT's written communications with all customers or potential customers-regardless of whether PSS converted them to its infringing machine. This includes hundreds of customers and potential customers and likely thousands of emails. ALT proposed a compromise to Defendants that the parties continue their established course of action in which Defendants promptly disclose new sales to ALT, at which point ALT will promptly produce any relevant emails and sales proposals with that converted customer.
It Is Too Late for Defendants to Raise a Theory of “Price Elasticity”
Defendants argue that email communications are relevant to issues of “price elasticity.” However, Defendants never requested discovery on “price elasticity” or even used that phrase until the past week. ALT is unclear whether this previously undisclosed theory concerns elastic or inelastic demand. Notably, Defendants elected not to serve their own proponent expert report on damages. Thus, any rebuttal is limited to issues discussed in ALT's proponent report, which does not raise any theory of “price elasticity.”
Even if Defendants were permitted to raise a previously undisclosed and non-responsive damages theory in a rebuttal expert report-which they are not-their untimely request is overly broad and unduly burdensome. “Price elasticity” is a concept, not a search phrase. Defendants' request would require ALT to review literally every external facing email since ALT's inception to make a relevancy determination. Defendants' request is untimely, overly broad, and unduly burdensome.
Defendants' request should be denied. Thank you for your consideration.