Princeton Digital Image Corp. v. Konami Digital Entertainment, Inc., 316 F.R.D. 89, No. 12-1461 (D. Del. Aug. 31, 2016) [click for opinion]
Plaintiff, Princeton Digital, sought documents from Konami Digital Entertainment, Inc. ("Konami U.S.") that were held by Konami Digital Entertainment, Ltd. ("Konami Japan"). Konami Japan is the developer of the Dance Dance Revolution games accused of infringing Plaintiff's U.S. patent. That videogame is distributed by Konami U.S. in the United States.
As the district court explained, Federal Rule of Civil Procedure 34(a) requires production of documents in a responding party's custody or control. The court had previously held that documents are in the "control" of a party to the litigation if that party has a legal right to obtain the documents required on demand from a non-party corporation. The burden of establishing the control over the documents is on the party seeking production.
Where a litigating company's affiliate possesses the desired documents, the Third Circuit has set out two pathways for finding the requisite control: (1) where the affiliate is found to be the alter ego of the litigating company; or (2) the litigating company acted with the affiliate in effecting the transaction giving rise to the suit and is litigating on its behalf. Princeton Digital relied on the second method of showing control. On this issue, a leading Third Circuit decision observed that "[w]here the relationship is thus such that the agent-subsidiary can secure documents of the principal-parent to meet its own business needs and documents helpful for use in the litigation, the courts will not permit the agent-subsidiary to deny control for purposes of discovery by an opposing party." The district court found, however, that Princeton Digital had failed to meet its burden of demonstrating that Konami U.S. had control over documents in the possession of Konami Japan.
Princeton Digital had pointed to little evidence regarding the relationship between Konami U.S. and Konami Japan. Instead, most of the evidence in the record came from a declaration of the Director of the Legal Department of Konami U.S. and showed that Konami U.S. did not have the ability to require that the requested documents be produced.
There was evidence that, in the past, Konami U.S. had been able to obtain the source code from Konami Japan for the accused game. However, the district court noted that this only showed that Konami U.S. had asked for and obtained source code from Konami Japan relevant to this litigation, not what other documents or materials may have been received. Furthermore, the district court noted that no information was provided by Princeton Digital to connect Konami Japan to the lawsuit, or to show that Konami U.S. was litigating on Konami Japan's behalf.
The district court thus denied the motion to compel Konami U.S. to produce documents held by Konami Japan, without prejudice to renewal on a stronger record.
January 2017 Volume 16, Issue 2