Unreported / Non-Citable
Background
Smart RF Inc. filed patent infringement cases against AT&T Mobility, Verizon, and T-Mobile regarding base station equipment and digital predistortion technology. To obtain discovery of the technical implementation, Smart RF served a Rule 45 subpoena on Samsung Electronics America Inc. (SEA), a Samsung subsidiary, requesting source code and documents showing how base station equipment that SEA supplies to Verizon implements digital predistortion. When SEA refused to produce the materials, Smart RF moved to compel compliance.
SEA defended its position by arguing that it lacked possession, custody, or control over the requested materials. The parties agreed that Samsung Electronics Co., Ltd. (SEC), SEA’s parent company, held the requested source code. SEA further argued that as a subsidiary, it could not control its parent and could not obtain the materials on demand, citing South Korea’s Foreign Trade Act as an additional legal barrier.
The Court’s Holding
The court denied Smart RF’s motion to compel, holding that SEA lacks possession, custody, or control over the requested source code and therefore cannot be required to produce it. The court applied the established principle that a subsidiary by definition does not control its parent company and thus is not required to furnish information held by the parent.
The court rejected Smart RF’s argument that the Definitive Purchase Agreement between SEA and Verizon established SEA’s authority to access the materials. Although the agreement obligated SEA to escrow source code in the United States, the agreement did not specifically identify the source code at issue, and SEA’s in-house counsel declared under oath that SEA never actually placed the relevant source code in escrow. The court concluded that the requested materials fall outside the scope of permissible discovery from SEA as a non-party.
Key Takeaways
- A subsidiary cannot be compelled via Rule 45 subpoena to produce documents held by its parent company, even when the subsidiary sells products incorporating those materials
- Corporate relationships create meaningful boundaries to discovery obligations; subsidiary status is dispositive of the lack of control over parent materials
- International trade law restrictions may further limit a subsidiary’s practical ability to access and produce parent company materials
Why It Matters
This decision clarifies the limits of discovery against non-party subsidiaries in patent litigation. Patent plaintiffs seeking access to foreign parent company materials cannot circumvent jurisdictional or practical obstacles by targeting the domestic subsidiary. The ruling reflects established law that possession, custody, or control—the threshold for Rule 45 subpoena obligations—requires actual authority over the materials, not mere corporate affiliation.
For discovery strategists, the decision underscores that alternative approaches may be necessary: directly subpoenaing the parent company if subject to U.S. jurisdiction, seeking depositions of corporate officers who can testify about technical details, or pursuing other evidence discovery mechanisms. The court’s acknowledgment of international trade restrictions also signals judicial deference to foreign law limitations on document production.