Docket: Case No. 5:16-mc-80002-PSG; Case No. 5:16-mc-80003-PSG, Case No. 5:16-mc-80004-PSG, Case No. 5:16-mc-80005-PSG, Case No. 5:16-mc-80006-PSG, Case No. 5:16-mc-80007-PSG, Case No. 5:16-mc-80008-PSG
Court: District Court, N.D. California; February 17, 2016; Federal District Court
Qualcomm Incorporated received an unfavorable Examiner’s Report from the Korean Fair Trade Commission (KFTC), which accused it of violating South Korean antitrust law. The KFTC has required Qualcomm to respond to these charges, but Qualcomm lacks access to the materials and evidence considered by the Examiner, as they were provided by third parties. To address this, Qualcomm sought assistance from the U.S. court under 28 U.S.C. § 1782, which allows for discovery processes that support foreign proceedings. U.S. courts can facilitate evidence gathering for international tribunals, but the court denied Qualcomm’s application due to constraints imposed by Supreme Court precedent. The KFTC, enforcing the Monopoly Regulation and Fair Trade Act, conducts investigations through Examiners who gather evidence and submissions from third parties, which are kept confidential to encourage full cooperation. If violations are suspected, the KFTC issues an Examiner’s Report, which outlines the charges but does not guarantee full access to supporting evidence for the examinee.
The KFTC Case Handling Procedures permit an examinee to request access to withheld exhibits, although such exhibits may be redacted or withheld to protect third-party confidential information. Despite this, examinees can petition the KFTC for access, prompting the Lead Commissioner to assess whether to grant access based on competing interests. Confidential materials may also be provided to the examinee with the submitting party's consent. It is noted that the appended data in an Examiner’s Report does not necessarily include all documents obtained during an investigation, meaning exculpatory documents for the examinee may be excluded. After the Examiner’s Report is issued, the examinee can submit a written response and participate in a hearing overseen by the KFTC Committee, which evaluates the evidence and makes a final determination on any alleged antitrust violations, potentially issuing binding orders for penalties or remedial actions. The Committee's decisions can be appealed to the Seoul High Court and subsequently to the Supreme Court of Korea.
Qualcomm, which manufactures chips and licenses patents for mobile devices, is facing allegations from KFTC Examiner Gyu-Ha Chai that its licensing practices violate the MRFTA. Qualcomm received part of the Examiner’s Report and has requested additional data, some of which has been provided with redactions. Qualcomm’s ongoing request for remaining data is pending. To prepare its defense, Qualcomm is seeking discovery from Respondents, including documents and deposition testimony, which is opposed by five Respondents and the KFTC itself as amicus curiae. Qualcomm has submitted a reply brief, and the court held oral arguments on February 9, 2016. The court confirmed its jurisdiction over Qualcomm’s applications under Section 1782 and decided to allow briefing from the opposing parties, raising questions about the burden of proof in these proceedings, which typically lies with the moving party but lacks explicit appellate court guidance in the context of Section 1782.
The court does not need to resolve the burden of proof regarding disputed facts since the targets of the proposed subpoenas have demonstrated that the Intel factors collectively argue against granting the applications. To evaluate a Section 1782 application, the court must first confirm the satisfaction of its three statutory requirements: 1) the person from whom discovery is sought must reside or be found in the district; 2) the discovery must be intended for use in a proceeding before a foreign tribunal; and 3) the application must be made by a foreign or international tribunal or an interested person. If these conditions are met, the court may grant the application, but is not obligated to do so.
The Intel case outlines four additional factors for consideration: 1) whether the material sought is within the foreign tribunal's jurisdiction and accessible without Section 1782 assistance; 2) the nature of the foreign tribunal and the receptivity of the foreign court or agency to U.S. jurisdictional assistance; 3) whether the request attempts to circumvent foreign proof-gathering restrictions; and 4) whether the subpoena is unduly intrusive or burdensome.
In this instance, while Qualcomm meets the statutory requirements, the Intel factors weigh against granting the subpoenas. All respondents, except Samsung Entities, are found in the district due to their systematic and continuous local activities, with companies like Apple and Intel headquartered there, and others maintaining offices within the district. Although Samsung Entities contest their presence, they also engage in significant local activities, having participated in numerous lawsuits in this court.
SEA and STA are registered and authorized to conduct business in California, while Samsung Research America, Inc., a subsidiary of SEC, is headquartered in the district. The Samsung Entities contend that these facts do not establish a sufficient presence in the district. However, the court finds that when considering the cumulative effect of these activities, they demonstrate systematic and continuous local engagement. Notably, the Samsung Entities initiated litigation against Apple in this forum, linking their case to Qualcomm’s Section 1782 application. The activities of SEA, STA, and their subsidiary collectively indicate substantial operations in California.
Regarding the statutory requirements of Section 1782, the discovery sought pertains to a proceeding before the KFTC, a foreign administrative agency capable of issuing final, reviewable rulings, thus fulfilling the second requirement. Qualcomm qualifies as an interested person under the third requirement as it is involved in the KFTC proceeding.
Despite meeting these criteria, the Intel factors suggest reluctance to grant Qualcomm’s applications. The first factor concerning the foreign tribunal’s jurisdiction is neutral, as the Supreme Court indicates that if the discovery target is a participant in the foreign proceeding, the necessity for Section 1782 assistance is less pronounced. The Samsung Entities, along with Apple and MediaTek, argue they are participants in the KFTC proceedings since they have provided documents to the agency’s investigative team. Conversely, Intel claims it has cooperated with the KFTC, making it within the agency's jurisdiction.
Texas Instruments contends that it provided documents to KFTC investigators, but it remains unclear whether this cooperation qualifies the Respondents as participants in KFTC proceedings. The KFTC Committee ultimately decides on antitrust violations, with Qualcomm and the Examiner presenting their arguments, while no Respondents claim any relation to the proceedings. Thus, only Qualcomm and the Examiner are deemed participants, and Respondents’ cooperation does not equate to participation in the KFTC tribunal.
The issue of participation does not determine the court's authority to compel evidence production. The focus shifts to the availability of evidence to the foreign tribunal, which may include evidence held by nonparticipants. Qualcomm asserts it cannot compel production from Respondents, leaving uncertainty about the Committee’s ability to obtain the evidence.
The second Intel factor, involving the nature of the foreign tribunal and its receptivity to U.S. judicial assistance, favors Respondents. The KFTC’s amicus brief requests denial of Qualcomm’s applications and indicates no need for the requested discovery, suggesting a lack of receptivity to U.S. assistance. Qualcomm argues the brief reflects only the Examiner’s views, not the KFTC Committee's. However, the court must take the amicus brief at face value, as it is on KFTC letterhead and represents the KFTC’s official position. Therefore, without sufficient grounds to disregard the amicus brief’s authenticity, the court accepts it as the KFTC’s stance, which strongly favors Respondents.
The third Intel factor, concerning whether an applicant seeks to bypass foreign proof-gathering restrictions, favors Respondents. The KFTC asserts that it has established procedures for obtaining documents related to the Examiner’s Report, and Qualcomm’s Section 1782 applications appear to improperly circumvent these procedures. If allowed, this would undermine the KFTC's authority to regulate the release of confidential investigatory materials, interfere with its ability to balance policy goals and privacy rights, and potentially discourage third-party cooperation in future investigations. Qualcomm contends that its applications do not bypass KFTC procedures since they seek more comprehensive discovery than what is available under those procedures. However, the KFTC argues that allowing Qualcomm to sidestep its processes could negatively impact its enforcement of antitrust laws and the willingness of third parties to cooperate. The KFTC has protections in place for third-party confidentiality, which would be compromised if U.S. discovery were permitted. Even if Qualcomm's requests only partially seek to bypass KFTC procedures, significant concerns remain that weigh against granting its applications. Qualcomm suggests alternative methods to address these concerns, but principles of comity advise against the court substituting its judgment for the KFTC's management of its processes. The fourth Intel factor, regarding the intrusiveness and burden of requests, also favors Respondents, as the requests are seen as overly broad and lacking narrow tailoring, potentially constituting a 'fishing expedition' for irrelevant information.
Requests for discovery from Qualcomm to Apple and other entities are aimed at obtaining a wide range of documents related to investigations by the KFTC regarding Qualcomm's business practices. Specifically, Qualcomm seeks documents from Apple dating from January 1, 2011, to the present related to Qualcomm, mobile devices, modem chipsets, and cellular intellectual property rights (IPR), as well as communications concerning licensing requests. Qualcomm also requests documents from Apple dating back to January 1, 2005, related to Apple’s inquiries about Qualcomm's IPR. Additionally, Qualcomm is seeking documents from various companies, including Intel and Samsung, connected to their dealings with the KFTC and any concerns raised by customers about Qualcomm's licensing.
The requests are extensive, covering a time frame of five to eleven years and not limited to KFTC proceedings or geographic relevance. They encompass documents potentially already in Qualcomm's possession or shared by other parties, many of which are marked confidential under protective orders. Qualcomm argues that despite the potential burdens of production, the relevance of the requested documents justifies their requests. The company contends that the respondents would have already gathered much of this information during their cooperation with the investigation and that any claims about the burdensome nature of the requests are overstated, particularly as they believe relevant documents may not exist in the first place.
Qualcomm's requests for discovery under Section 1782 have been deemed overly broad and unpersuasive in light of the information's relevance. The requests seek more documents than were provided to the Examiner, and Section 1782 allows access to a wider range of materials than the KFTC’s Case Handling Procedures, which Qualcomm opted to bypass. Despite Qualcomm's belief that no responsive documents exist, the requests necessitate extensive searches through a decade's worth of materials, indicating a lack of narrow tailoring. The Intel factors indicate a strong opposition to Qualcomm’s Section 1782 subpoenas, which have been denied. Additional relief options exist under the Hague Evidence Convention, though they are not currently at issue. Confidentiality provisions under relevant laws are invoked, prohibiting officials from disclosing enterprise-related confidential information obtained during their duties.
The document references multiple case dockets concerning the application of 28 U.S.C. § 1782, which allows for the discovery of evidence for use in foreign tribunals. It cites relevant case law, including *In re Godfrey* and *Intel Corp. v. Advanced Micro Devices, Inc.*, emphasizing that the legislative intent behind § 1782 was to facilitate the gathering of evidence located within the United States. The document notes that MediaTek USA lacks possession of relevant documents, implying that its foreign affiliates are not subject to U.S. jurisdiction under this statute. Court decisions, such as *Norex Petroleum Ltd. v. Chubb Ins. Co. of Canada*, suggest a reluctance to order discovery of documents located outside the U.S. The excerpt further indicates that the court decided not to address the issue of whether it could authorize discovery of externally held documents due to the unfavorable Intel factors regarding Qualcomm's subpoena. Additional references to other cases illustrate the ongoing legal discourse surrounding the scope and application of § 1782 in international contexts.
In the case of Apple Inc. v. Samsung Electronics Co. Ltd., the court analyzed jurisdictional issues concerning Samsung's status as both a plaintiff and counterclaimant against Apple. The discussion references precedent cases, including AstraZeneca and Soma Medical, which highlight that mere participation in unrelated litigation does not establish general jurisdiction in a state. Additionally, the presence of a wholly-owned subsidiary in a district does not inherently make the parent company subject to jurisdiction there, as seen in the Nokia case. California law requires foreign corporations to obtain a certificate of qualification to transact intrastate business, indicating that registration implies intent for ongoing business activities within the state. Samsung acknowledged a subsidiary's permanent headquarters in the district but argued that this alone does not support a finding of jurisdiction over the parent company. The document emphasizes the need for substantial and systematic contacts to establish general jurisdiction, rather than incidental or unrelated business activities.
General jurisdiction can be established based on the totality of a defendant's contacts with a forum, even if those contacts alone would not suffice on an individual basis, as demonstrated in Coremetrics, Inc. v. Atomic Park.com, LLC. In the context of discovery for foreign proceedings, an entity qualifies as an interested person if it is a party to the foreign action, as confirmed in cases like In re Ex Parte Application of Global Energy Horizons Corp. Various cases illustrate the principle that U.S. discovery may be denied if the information sought can be obtained from other parties in the foreign litigation, emphasizing the foreign tribunal's ability to control evidence. For instance, the court rejected applications for U.S. discovery when relevant information could be produced by other parties involved in the foreign proceedings. Ultimately, the focus for district courts in 28 U.S.C. § 1782 applications should be on the foreign tribunal's capacity to order production rather than the nominal target of the discovery request.
A request for judicial assistance by U.S. federal courts is denied due to the European Commission's clear opposition to such assistance in the case at hand. The decision references prior cases, including Advanced Micro Devices, Inc. v. Intel Corp., emphasizing that granting discovery requests against the Commission's wishes would undermine the principles of comity and cooperation between jurisdictions. The Commission's explicit stance against U.S. judicial assistance is highlighted as a critical factor, asserting that compliance with such requests could discourage other foreign tribunals from respecting U.S. sovereignty concerns. Furthermore, it is noted that the Korea Fair Trade Commission (KFTC) similarly opposes requests from Qualcomm, asserting that it has no need for the requested discovery. The memorandum of understanding between U.S. and Korean authorities reinforces the importance of considering each other's enforcement objectives, further supporting the rejection of the requests based on established comity principles. Examples from other cases illustrate that U.S. courts typically refuse to interfere in foreign government proceedings, reinforcing the notion that judicial assistance in this instance would disrupt existing balances in international legal frameworks.
Numerous cases (5:16-mc-80003-PSG to 5:16-mc-80008-PSG) reference issues regarding document requests under 28 U.S.C. § 1782, specifically highlighting concerns over overbreadth and intrusiveness. The cited cases emphasize the necessity for applicants to specifically tailor their requests to avoid being unduly intrusive. For instance, in Advanced Micro Devices, Inc. v. Intel Corp., the court criticized an applicant for failing to include relevant geographic limitations in their requests, indicating a lack of specificity undermined their application. Similarly, in Thompson v. Doel, a request for extensive email activity over five years was denied due to its broad nature without justification. Additionally, the court in Chevron Corp. v. Donziger noted the importance of limiting discovery if information can be obtained from less burdensome sources. Confidentiality and privilege concerns are also highlighted, as seen in In re Microsoft Corporation, which found requests could violate confidentiality rules. Overall, the excerpt underscores the courts' insistence on specificity and reasonableness in discovery requests to ensure they are not overly burdensome or intrusive.
