United States: District Court Extends Fact Discovery Deadline To Permit Additional Inspection Of Source Code Prior To Submission Of Expert Reports

In this patent infringement action, Plaintiff Personalized Media Communications, LLC ("PMC") filed a motion seeking (1) a court order compelling Defendant Netflix Inc. ("Netflix") to provide PMC with on-site access to Netflix's source code after the close of fact discovery or, in the alternative, (2) an extension of the fact discovery deadline to allow review of the source code. Netflix opposed the motion asserting that PMC should have completed review of the source code prior to the close of fact discovery and that there was no good cause to extend the fact discovery deadline.

In support of its positon, PMC did not cite to any case law that supported its argument that a party producing confidential source code through on-site access procedures must allow further review of this source code after the fact discovery deadline. The district court did not find persuasive the cases cited by PMC, which concern inspection of physical sites rather than review of confidential source code.

In contrast, Netflix cited to Finjan, LLC v. Qualys Inc., No. 18 Civ. 7229 (YGR) (TSH), 2020 WL 6581836 at *1 (N.D. Cal. Nov. 10, 2020), where the Court denied a request nearly identical to the one being made by PMC. There, the plaintiff had to review defendant's "source code in electronic format on the review computer on which [defendant] had made the code available." Id. Fact discovery had closed, and the plaintiff was requesting access to the source code for its expert discovery. In Qualys, the court had to make the determination of whether access to the source code was fact discovery or expert discovery, and if it was the former—"[plaintiff] is no longer entitled to it." Id. Commenting that "[t]he question does not seem close," the court denied plaintiff access to the source code for its expert report. The parties here do not dispute that source code review was part of fact discovery here, and the Court agrees with the reasoning in Qualys, particularly that "[i]f the desire to obtain information so your expert can use it were enough to turn something into expert discovery, then the fact discovery cutoff in patent infringement cases would be nearly meaningless because almost all of the fact discovery is designed to support one or more expert reports." Id. at *2.

The district court also rejected PMC's argument that because Netflix has allowed PMC to review certain source code on-site, Netflix has an obligation to provide PMC with on-site access to that code past the fact discovery deadline. “Such a discovery protocol would be uncommon and costly for the producing party, and it is something the Protective Order would have directly addressed.”

The district court did, however, agree with PMC's alternative request to extend the fact discovery deadline, so that its expert witness could review the source code. The district court explained that pursuant to Federal Rule of Civil Procedure 16(b)(4), "[a] schedule may be modified only for good cause and with the judge's consent." Although the primary consideration in whether good cause exists is whether the moving party can demonstrate diligence, Kassner v. 2nd Ave. Delicatessen, Inc., 496 F.3d 229, 244 (2d Cir. 2007), courts consider "a number of other factors in determining whether good cause exists," such as "the moving party's explanation for failing to comply with the scheduling order," "the importance and relevance of the expert testimony to the case," and "prejudice to the party opposing the request." Rubik's Brand Ltd. v. Flambeau, Inc., 329 F.R.D. 55, 58 (S.D.N.Y. 2019). See also Young v. Sw. Airlines Co., No. 14 Civ. 1940 (LDH) (RLM), 2016 WL 3257008, at *2 (E.D.N.Y. May 4, 2016).

The district court stated that “a]lthough a close call, the Court finds that there is good cause to extend the fact discovery deadline for the limited purpose of allowing PMC's expert to review the source code for preparation of his report. While the Court is surprised that PMC only began its expert witness review of the source code two weeks before the expert report deadline, the "importance and relevance of the expert testimony to the case," Flambeau, Inc., 329 F.R.D. at 58, cannot be overstated when the subject matter of the litigation is as technical and complex as here. Finally, there is minimal, if any, prejudice to Netflix. In fact, and not surprisingly, Netflix has admitted that it will be allowing its expert to review the source code after the fact discovery deadline. Dkt. 152 at 3. As aptly noted by many courts, "the over-arching purpose of the discovery rules" is to promote "'the disclosure of information and materials . . . and to level the playing field' for both parties to the litigation." Gordon v. Target Corp., 318 F.R.D. 242, 246 (E.D.N.Y. 2016) (quoting United States v. Smith, 985 F.Supp.2d 506, 520 (S.D.N.Y. 2013)).

The district court therefore granted PMC's request to extend the fact discovery deadline for the limited purpose of allowing its expert to review the previously viewed source code.

Personalized Media Communications, LLC v. Netflix Inc., Case No. 20-CV-3708 (JPC) (S.D.N.Y. Jan. 12, 2021)

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