alg Doc 617 Filed 03/15/12 Entered 03/15/12 16:13:49 Main Document Pg 1 of 8

Transcription

1 Pg 1 of 8 James H.M. Sprayregen, P.C. Paul M. Basta Brian S. Lennon KIRKLAND & ELLIS LLP 601 Lexington Avenue New York, New York Telephone: ( Facsimile: ( and - David R. Seligman P.C. KIRKLAND & ELLIS LLP 300 North LaSalle Chicago, Illinois Telephone ( Facsimile: ( Counsel to Apple Inc. UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re: Chapter 11 EASTMAN KODAK COMPANY, et al. Case No (ALG Debtors. Jointly Administered LIMITED OBJECTION OF APPLE INC. TO DEBTORS MOTION FOR AN ORDER PURSUANT TO BANKRUPTCY RULE 2004 DIRECTING THE EXAMINATION OF APPLE, INC. Apple Inc. ( Apple respectfully submits this limited objection (the Limited Objection to the Debtors Motion for an Order Pursuant to Bankruptcy Rule 2004 Directing the Examination of Apple, Inc. [Docket No. 474] (the Rule 2004 Motion. In support of this Limited Objection, Apple respectfully states as follows: K&E

2 Pg 2 of 8 Limited Objection 1. Apple has agreed to provide Eastman Kodak Company ( Kodak with a list of the patents for which Apple (based on information presently known to it has claims of ownership, and the causes of action that Apple intends to assert. Apple has further agreed to make arrangements for Kodak s bankruptcy counsel to be provided expedited access to the thousands of pages of documents that Apple already has produced to Kodak in other proceedings that relate to these ownership claims. If Kodak s Rule 2004 Motion is proper at all, Apple s voluntary identification of its claims and production of documents relating to those claims should satisfy its obligations and this Court at this juncture. Kodak does not need, and is not entitled to, anything more to allow it to propose a path forward for resolving Apple s claims at a trial on their merits. 2. Kodak s insistence for one-way discovery from Apple stands in stark contrast to its continuing refusal to offer any proposal as to how the parties should proceed in adjudicating Apple s ownership claims. At the March 8, 2012 hearing, the Court directed Kodak and Apple to engage in negotiations to develop a mutually-agreeable process for litigating Apple s claims that preserves all parties procedural and substantive rights. Apple initiated those discussions, and has attempted to engage in constructive negotiations with Kodak regarding both the litigation process and the Rule 2004 Motion. Despite multiple attempts by Apple to engage Kodak s counsel in a discussion as to a mechanism by which Apple s claims can be adjudicated, Kodak has failed to come forth with any specific proposal to date. 1 Kodak continues to ignore 1 After the March 8 hearing, Apple contacted Kodak s counsel on March 9, 2012 and requested a meet and confer early during the week of March 12, Kodak and Apple participated in telephonic meetings on March 12 and March 13 during which Apple informed Kodak that it would voluntarily produce documents responsive to the Request for Production of Documents attached as Exhibit B to the Rule 2004 Motion (the Document Request and also would provide to Kodak a list of the patents for which Apple (based on information presently known to it has claims of ownership, and the causes of action that Apple intends to 2

3 Pg 3 of 8 Apple s assertion of claims that implicate complex patent law issues and request for a jury trial, and thus the parties apparent dispute as to where and how these claims can be tried. As a result of Kodak s unwillingness to even acknowledge that Apple is entitled to a judicial determination of its right to request withdrawal of the reference to this Court, the parties have made no progress with respect to agreement (or even further discussion on a litigation procedure. 3. Against this backdrop, Kodak has informed Apple that it intends to continue to prosecute its Rule 2004 Motion, thereby necessitating this limited objection. In doing so, Kodak ignores Apple s efforts to make documents regarding its ownership claims available to Kodak and demands that this Court authorize it to engage in an extensive one-way discovery process against Apple in advance of what all parties agree will be some form of litigation proceeding to resolve the parties disputes. For the reasons set forth below, Apple respectfully submits that the Rule 2004 Motion should be denied as unnecessary, as procedurally improper, and as premature. A. Kodak Does Not Need an Order Compelling Apple to Submit to an Examination Pursuant to Rule Apple has agreed to identify the universe of its potential claims against Kodak so that the parties can attempt to agree on an appropriate procedure for litigating those claims in an expeditious manner. Apple had hoped to do that in the context of the long-pending proceeding in the Western District of New York the ownership claims of which were first asserted by Apple in a California State Court action but its efforts to do so have been opposed by Kodak and (most recently rejected by this Court. 5. Apple has indicated to Kodak that it will be voluntarily identifying, by the end of this week, a list of the patents to which Apple claims ownership and a summary of the specific assert. On March 14, Kodak informed Apple that, notwithstanding Apple s offer to produce responsive documents, Kodak intended to proceed with the hearing on the Rule 2004 Motion as scheduled. 3

4 Pg 4 of 8 causes of action Apple believes it has against Kodak with respect to these patents. This is not a document that Apple has available for production, but rather will be a letter prepared by counsel that identifies the patents and causes of action known to Apple at the present time, with a full reservation of rights as contemplated by this Court s comments at the March 8 hearing. 6. To the extent that Kodak s Rule 2004 Motion seeks Apple s documents relating to its ownership claims, the vast majority of the documents that Kodak requests have already been produced to Kodak s patent litigation attorneys in the various Apple-Kodak litigation proceedings pending outside of this Court a fact that Kodak fails to mention in the Rule 2004 Motion. These previously-produced documents are subject to a protective order that was mutually agreed to by Apple and Kodak. Apple has informed Kodak that it has no objection to Kodak s bankruptcy attorneys gaining access to these documents, at least to the extent Apple has the requisite authority to do so. And, to the extent Apple does not have such authority, Apple is willing to consent to modifications to applicable protective orders so that such documents can be made available to Kodak s (and Apple s bankruptcy attorneys. 7. In fact, Kodak knows that Apple has been actively negotiating a cross-use agreement with Kodak s counsel in other litigations so that Kodak s (and Apple s bankruptcy counsel would be able to access, on an expedited basis, confidential documents that have been produced by Apple to Kodak in the context of the pre-petition litigation pending between Apple and Kodak. Subject to the agreement of Kodak s counsel (and court approval of an appropriate protective order, Apple also is willing re-produce any and all documents relevant to the ownership claims in the context of the bankruptcy/ownership proceedings (in whatever form they end up taking, to allow attorneys for the official committee of unsecured creditors and the 4

5 Pg 5 of 8 attorneys for the ad hoc committee of second lienholders to be permitted appropriate access to those documents. 8. Based on these facts, Apple respectfully submits that Kodak does not need an Order from this Court directing Apple to submit to a Rule 2004 examination. B. Kodak s Rule 2004 Motion Is Procedurally Flawed. 9. To the extent that Kodak seeks any additional discovery pursuant to the Rule 2004 Motion, the motion should be denied as procedurally and substantively flawed. It is wellrecognized that an examination pursuant to Bankruptcy Rule 2004 is not appropriate if the movant has the ability to request discovery in connection with a contested matter. [O]nce an adversary proceeding or contested matter has commenced, discovery is made pursuant to the Fed.R.Bankr.P et seq., rather than by a Fed.R.Bankr.P examination. In re Bennett Funding Group, 203 B.R. 24, 28 (Bankr. N.D.N.Y (citations omitted; see also In re Enron Corp., 281 B.R. 836, (Bankr. S.D.N.Y This is primarily because Bankruptcy Rules 7026 through 7035 provide various safeguards, protections, and wellestablished processes for how discovery is to be conducted, and define the appropriate contours of that discovery. See id. 10. Kodak attempts to argue that the pending proceeding rule does not apply here because, other than with respect to U.S. Patent No. 6,292,218 (the 218 Patent, Apple did not assert ownership rights over any of Kodak s patents in any of the pre-petition litigations between Kodak and Apple. In making this argument, Kodak dismisses the fact that Apple s motions seeking relief from the stay (the Automatic Stay Motions were pending when Kodak filed its Rule 2004 Motion. 2 Although Kodak acknowledges Apple s additional ownership claims in its 2 Kodak also ignores the fact that Apple has been seeking to move forward with its ownership claims for nearly two years, and Kodak would have had further clarity about Apple s claims long ago if it had not blocked the 5

6 Pg 6 of 8 objections to the Automatic Stay Motions, Kodak did not serve any discovery requests on Apple in connection with its objections to the Automatic Stay Motions Rather, Kodak chose to avoid the more stringent discovery rules in place under Bankruptcy Rule 7026 in favor of the more lenient discovery rules under Bankruptcy Rule Indeed, because Bankruptcy Rule 2004 examinations are largely an unfettered exercise often characterized as fishing expeditions courts are wary of Bankruptcy Rule 2004 discovery producing evidence that pertains to a pending contested matter, which evidence should be produced and collected in accordance with the more regimented discovery procedures of Bankruptcy Rule 7026 and Rule 26 of the Federal Rules of Civil Procedure. See Bennett, 203 B.R. at Here, both parties acknowledge that there is a dispute that must be resolved, and the Court directed the parties to engage in discussions to explore a mutually agreeable process to resolve that dispute, while preserving parties substantive and procedural rights. Based on these facts, it would be inappropriate to grant Kodak extensive one-way discovery in advance of that litigation through the guise of a Rule 2004 Motion. C. Kodak s Attempt to Obtain Discovery From Apple Is Premature. 13. As described above, Apple is ready and willing to attempt to negotiate mutuallyagreeable procedures with Kodak provided that parties procedural and substantive rights are safeguarded to expedite the litigation of Apple s ownership claims. Apple has agreed to provide Kodak with more than sufficient information to enable Kodak to work with Apple in the progress of these pre-petition cases. 3 See Debtors Objection to Apple Inc s Motion Seeking Relief from the Automatic Stay to Facilitate Resolution of Patent Ownership Disputes prior to the Debtors Sale of those Patents [Docket No. 468]; Debtors Objection to Apple Inc. s Motion Seeking Authority to Initiate Patent Infringement Actions Against Eastman Kodak Company [Docket No. 467]. 6

7 Pg 7 of 8 development of those litigation procedures. Specifically, Apple is providing Kodak with a list of the patents to which Apple claims ownership and a summary of the causes of action that Apple has against Kodak. Kodak has not articulated any basis as to why it needs more to propose a mechanism for proceeding with adjudication of Apple s ownership claims. 14. If and when appropriate litigation procedures are agreed upon, the parties will plead their claims and both parties will engage in more extensive discovery practice. Apple respectfully submits that it would be premature for this Court to compel Apple to complete its discovery production in advance of that litigation, especially when it remains unclear what the procedures will entail or where the litigation will take place. To avoid any unfair prejudice and to preserve both parties rights to due process, the parties should engage in discovery at the same time after the claims are formally pled. Reservation of Rights 15. Apple reserves all of its rights, and nothing contained herein should be construed as consent by Apple to the adjudication of its patent ownership claims in this Court, as a waiver of Apple s right to a jury trial, or as a waiver or Apple s right to request withdrawal of the reference with respect to any matters in these chapter 11 cases. Conclusion 16. Apple has agreed to provide Kodak with more than sufficient information to assess how and where Apple s ownership claims should be litigated. Further litigation and discovery practice is inevitable in this case. Given Apple s cooperation to date and the need for further two-way discovery in the future, this Court should deny the relief requested in the Rule 2004 Motion. 7

8 Pg 8 of 8 New York, New York Dated: March 15, 2012 /s/ Brian S. Lennon James H.M. Sprayregen, P.C. Paul M. Basta Brian S. Lennon KIRKLAND & ELLIS LLP 601 Lexington Avenue New York, New York Telephone: ( Facsimile: ( and - David R. Seligman P.C. KIRKLAND & ELLIS LLP 300 North LaSalle Chicago, Illinois Telephone: ( Facsimile: ( Counsel to Apple Inc. 8