Magistrate Judge Figueredo “Shines a Light” on Discovery Standards for Potential Non-Infringing Alternatives
On August 22, 2022, Magistrate Judge Valerie Figueredo (S.D.N.Y) granted a motion by solar tracker manufacturer FCX Solar, LLC (“FCX”) to compel the production of documents relating to Defendant FTC Solar, Inc’s (“FTC”) development of a “next-generation” solar tracking product. See FCX Solar LLC v. FTC Solar Inc., No. 1:21-CV-03556, 2022 BL 293064 (S.D.N.Y. Aug. 22, 2022).
“Solar trackers” systems rotate solar panels to track the sun to more efficiently generate electricity. FTC manufactures two types of solar tracker systems which FCX claims infringe its ’782 Patent. FCX sought discovery into the design, development, manufacture, and production of those systems, as well as a “next-generation” system created by FTC but not accused of infringement. FTC refused to provide discovery into the next-generation design, alleging that such discovery is not relevant to FCX’s claims.
FCX moved to compel the production of documents relating to FTC’s next-generation design. It argued the documents were relevant for three reasons: (1) they informed FCX’s damages analysis, particularly its analysis into the availability of non-infringing alternatives; (2) they were relevant to FCX’s willful infringement claim because they could show that FTC’s next-generation design specifically “designed around” FCX’s patent; and (3) they were relevant to FCX’s affirmative defense of non-obviousness.
Magistrate Judge Figueredo agreed with all three of FCX’s arguments, finding that FCX “has made a particularized showing establishing why the information it seeks is relevant to its case, and Defendant has not argued that the discovery sought is cumulative or burdensome.” Op. at 3. Judge Figueredo first found that documents relating to the next-generation design were relevant to FCX’s damages analysis, because the existence of a non-infringing alternative product could affect the reasonable royalty awarded FCX in a hypothetical negotiation. Op. at 4-7. She rejected FTC’s argument that the existence of a non-infringing alternative could only help FTC’s defense and had no relevance to FCX’s claims, finding that “if avoiding infringement would be challenging or costly . . . that itself could justify a greater reasonable royalty.” Op. at 5. Judge Figueredo was similarly unpersuaded by cases stating that unaccused products must be “reasonably similar” to accused products to warrant discovery. In those cases, she found, discovery into unaccused products was sought to investigate whether the unaccused product was in fact infringing, not—as here—to inform the plaintiff’s damages analysis. Op. at 6.
Judge Figueredo also agreed with FCX that the documents being sought are relevant to FCX’s willful infringement claim, because a letter from FTC’s general counsel stated that the next-generation system “does not infringe” FCX’s patent because it does not “include a damper piston having ports of different sizes.” Op. at 8. Finally, Judge Figueredo found that the next-generation design documents were relevant to secondary considerations of non-obviousness, even though the design was developed after FCX’s application for the ’782 Patent had been filed. See Op. at 9.