ChromaDex Wins Discovery Dispute
Magistrate Judge McCormick has granted ChromaDex's motion to compel Elysium to reveal the source of its Mystery NR. You can read the order here:
Here is the key language:
And thus the parties ask the Court to wade into the murky depths of patent misuse doctrine. Having reviewed the cases supplied by the parties in their briefs and during the hearing, the Court finds no clear guidance about which party has the better of the argument about the proper temporal scope of the market power-anticompetitive effect inquiry required by Elysium’s patent misuse claim. Perhaps that will be an issue with which Judge Carney will be asked to grapple. But in the meantime, it is quite telling that Elysium’s second amended counterclaim filed just several weeks ago plainly alleges that ChromaDex currently possesses such market power and that the anticompetitive effect of its practices are ongoing. See Dkt. 65 ¶ 28 (“ChromaDex had, and still has, market power in the market for supply of [NR] in the United States and worldwide.” (emphasis added))...These allegations alone are sufficient to make the information ChromaDex seeks about Elysium’s other sources of NR relevant to Elysium’s patent misuse claim. And because the patent misuse claim makes these documents relevant, the Court need not grapple with the parties’ other arguments.
This isn't necessarily the end of the dispute, because Elysium is entitled to ask Judge Carney to review this ruling, which Judge Carney may or may not agree to do, and if he does agree to review it, he may or may not agree with Magistrate Judge McCormick. And because Elysium has shown a real gusto when it comes to multiplication of vexatious litigation, it is easy to imagine that Elysium would challenge this order.
However, I doubt that Elysium will prevail even if they do try to challenge it.
First, as I pointed out when ChromaDex briefed its motion to compel, it was pretty close to a slam dunk -- I couldn't imagine how Elysium would be able to respond to 2-3 of ChromaDex's arguments, and Elysium did not even attempt to respond to them all. One of those particularly strong arguments was the basis for Magistrate Judge McCormick's ruling, and the others remain on deck.
Second, Elysium's problem is that they are asserting (1) a bogus claim for Patent Misuse, (2) a ridiculous claim that their claim has not been mooted because there is some ongoing issue, and (3) a farfetched claim that they were defrauded when ChromaDex stated the terms on which it was willing to do business when they signed their original contract. If the Court had denied all these claims, as it should have, instead of allowing Elysium to try to prove it, then ChromaDex might not have any legal need for discovery with respect to how Elysium runs its business today. However, Elysium cannot have its cake and eat it, too, by asserting a bunch of claims and then refusing to respond to discovery requests relevant to ChromaDex's ability to defend itself against those claims.
Third, please note this important language from Magistrate Judge McCormick's order:
And thus the parties ask the Court to wade into the murky depths of patent misuse doctrine.
They say fools rush in where angels fear to tread. Judge Carney has gotten the law wrong on Patent Misuse in his prior rulings in many respects. Magistrate Judge McCormick recognizes (1) that Patent Misuse is a murky area of the law, and (2) that it's easy to screw up when you get into highly technical, specialized areas of the law -- especially if you don't want to spend a lot of time on it or at least pay close attention to the specialty courts that address this issue (that would be the USCA for the Federal Circuit when it comes to Patent Law).
It's too much to hope that Judge Carney will become very expert in the law of Patent Misuse. I can find only two prior published cases in which Judge Carney has ruled on Patent Misuse claims [Parallax v. Greatmats (2017 WL 3453297), and Massimo v. Mindray (2013 WL 12129654)], and in neither of them does it appear that they got into the substance of the claims. So apparently Judge Carney did not previously have a chance to make any unprecedented, first-in-history Patent Law rulings, like his ruling in this case that a trademark in a patented product could ITSELF be a separate product that could be unlawfully tied.
But I do expect that, given that Judge Carney has allowed Elysium to attempt to prove its Patent Misuse claim based on a theory of ongoing injury, Judge Carney would require Elysium to submit to discovery regarding that ongoing injury, should he reach that issue.