The Perils of Acting Too Late – the Federal Court Addresses Third Party Discovery

Rovi Guides, Inc. v. Videotron G.P., 2019 FC 1220 highlights several ways in which a party might disentitle itself to orders for third-party discovery through delay and inaction.

In this recent decision, the Federal Court (“Court”) dismissed a motion seeking orders for documentary discovery and leave to examine six different non-parties, finding, inter alia, that the motion was an abuse of process and that the moving party had unnecessarily and unreasonably delayed in seeking third-party discovery.

This decision highlights the importance of parties being proactive and organized very early in the patent litigation process so as to avoid encountering the consequences flowing from motions that are dismissed on the eve of trial. In addition, given that motions brought on the eve of trial are typically heard by the trial judge, by moving late, a plaintiff risks creating the impression that its case is flawed and disorganized in the mind of the ultimate decision-maker.

Background

Rovi Guides, Inc. and TiVo Solutions Inc. (collectively “Rovi/TiVo”) own Canadian Letters Patent Nos. 2,323,539 (the “539 Patent”) and 2,333,460 (the “460 Patent”). The 539 Patent relates to an apparatus and method used to pause, fast-forward and rewind live television, also known as “trick play” technology. The 460 Patent relates to an apparatus and method that allows users to record a live television program while watching the same or another program – a process commonly referred to as “time warp” functionality.

On June 23, 2017, which is more than two years ago, Rovi/TiVo commenced an action against Videotron G.P. and Videotron Ltd. (collectively “Videotron”) alleging that Videotron supplied various television services using technology that infringed on the claims in the 539 and 460 Patents.

After the close of pleadings, the parties submitted letters detailing the number of witnesses they intended to call for trial. There was no mention in Rovi/TiVo’s letter of any non-party witnesses or any anticipated motion to compel production from a non-party.

The parties exchanged productions and conducted examinations for discovery. Only later did Rovi/TiVo tell Videotron that it believed additional third-party information would be necessary for trial.

On February 8, 2019, which was almost twenty months into the litigation, Rovi/TiVo finally brought a motion seeking production of documents and examination for discovery of Broadcom Canada, Samsung Canada, Technicolor Canada and related U.S. entities (i.e., the third parties). Prothonotary Aylen ordered Broadcom to produce some of the information requested by Rovi/TiVo, but the balance of the motion was dismissed.

Rovi/TiVo then moved for further third-party discovery, requesting essentially the same relief as in its first motion.

The Federal Court’s Decision

The Court dismissed Rovi/TiVo’s motion. It did so for three reasons:

1. First, it considered the motion an abuse of process, as Rovi/TiVo was essentially asking the Court to revisit the same issues that were the subject of its earlier motion.
2. Second, it found that Rovi/TiVo had not satisfied the requirements of Rules 233 and 238 of the Federal Courts Rules.
3. Third, it found that Rovi/TiVo had unnecessarily and unreasonably delayed its search for third-party information, causing prejudice to Videotron.

Abuse of Process

On the first motion, Rovi/TiVo pursued broad non-party discovery and submitted a draft order that reserved rights for a second motion; however, the draft order (which was later issued by Prothonotary Aylen) limited the scope of any second motion to the production of source code from Broadcom and narrow relief against Technicolor. Rovi/TiVo did not appeal the order.

On the second motion, the Court found that Rovi/TiVo was requesting essentially the same relief it had abandoned “with full knowledge and intent” on the first motion, which it considered an abuse of process.

Failure to Meet Rules 233 and 238

The Court has discretion under Rule 233 to require that a stranger to the litigation produce specific documents to a party involved in a proceeding before the Court. The power to compel third-party production is an “exceptional remedy”.

The Court also has discretion under Rule 238 to order examinations for discovery of non-parties. Like Rule 233, such relief is not routinely ordered. To be granted leave to examine a non-party under Rule 238, the moving party must show that:

• The non-party may have information relevant to an issue in the action;
• The party has been unable to obtain the information informally from the non-party or from another source by reasonable means;
• It would be unfair to not allow the party to question the non-party before trial; and
• The questioning will not cause undue delay, inconvenience or expense.

The Court found that Rovi/TiVo’s motion failed to meet the requirements of Rules 233 and 238. The Court emphasized that a judicial proceeding is not a speculative exercise that entitles parties to make “broad and speculative allegations in their pleadings in the hope that facts supporting the conclusion they seek may surface during discoveries”.

Delay Would Prejudice Videotron

In any event, the Court found that the significant delay by Rovi/TiVo in seeking non-party production was itself a sufficient reason to dismiss the motion. The Court observed that Rovi/TiVo was aware “early on” that it might require information from non-parties, but did not ask for third-party discovery until well after discoveries were meant to have been completed.

Rovi/TiVo also failed to address the delay that would ensue should its motion for non-party discovery be granted. The Court found that any delay or adjournment of the trial would inevitably prejudice Videotron, which had been focused on preparing its expert reports and complying with the Court’s strict deadlines

Authors: Jordan Scopa, Larissa Fulop and Duncan Lurie