TSRA Bond Issue

8/14/2019 TSRA Bond Issue

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UNITED STATES INTERNATIONAL TRADE COMMISSION

WASHINGTON, D.C. 20436

Before the Honorable Theodore R. Essex

Administrative Law Judge

In the Matter of

CERTAIN SEMICONDUCTOR CHIPS WITH

MINIMIZED CHIP PACKAGE SIZE AND

PRODUCTS CONTAINING SAME

Investigation No. 337-TA-605

COMPLAINANT TESSERA, INC.S

MOTION FOR LEAVE TO FILE A REPLY TO THE RESPONSES TO TESSERAS

MOTION FOR FORFEITURE OF RESPONDENTS BONDS,

LIMITED DISCOVERY, AND EVIDENTIARY HEARING

On October 16, 2009, Complainant Tessera, Inc. (Tessera) filed its Motion For

Forfeiture Of Respondents Bonds, Limited Discovery, and Evidentiary Hearing (Bond

Forfeiture Motion), pursuant to 19 C.F.R. 210.50(d). The motion, filed one day before the

deadline set by 19 C.F.R. 210.50(d), sought: (1) an Initial Determination requiring forfeit of all

bonds posted pursuant to the Commissions remedial orders within 45 days; (2) limited

discovery in order to determine whether the Respondents bonds posted, including those posted

with Customs, accurately reflected the number of infringing packages imported by Respondents

during the Presidential Review period; and (3) a brief evidentiary hearing to adjudicate the

correct amounts due to Tessera. Tessera also requested prejudgment interest.

On November 2, 2009, responses to Tesseras Bond Forfeiture Motion were filed

separately by Respondents Qualcomm, Inc. (Qualcomm); Freescale Semiconductor, Inc.


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(Freescale); Spansion, Inc. and Spansion, LLC (Spansion); STMicroelectronics (ST)

(collectively, Respondents); and the Commission Investigative Staff (Staff).

Pursuant to 19 C.F.R. 210.15(c) and Ground Rule 3.6, Tessera submits the attached

Reply in order to respond to new arguments raised by the Respondents opposition briefs, which

improperly: (1) seek to turn their pending Federal Circuit appeal into an excuse for denying bond

forfeiture altogether; (2) attempt to exploit the fact that information on bond amounts posted with

Customs is not available to Tessera as an excuse to prevent Tessera from ever knowing whether

Respondents properly fulfilled their bonding obligations; and (3) accuses Tessera of making a

premature filing, while disregarding the Commissions rules that required Tessera to file when it

did. Tesseras Reply is attached hereto as Exhibit A.

Pursuant to Ground Rule 3.2, counsel for Tessera contacted the Staff Investigative

Attorney and counsel for all Respondents prior to filing this Motion. All of the Respondents and

the Staff stated that they oppose the relief sought through this motion.

Dated: November 10, 2009 Respectfully submitted,

/s/ Amanda Tessar

Wayne M. BarskyGIBSON, DUNN & CRUTCHER LLP

2029 Century Park East

Los Angeles, California 90067Telephone: (310) 552-8500

Facsimile: (310) 551-8741

Amanda TessarDavid Glandorf

GIBSON, DUNN & CRUTCHER LLP1801 California Street Suite 4200

Denver, CO 80202-2642

Telephone: (303) 298-5742Facsimile: (303) 313-2826


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Jonathan H. SteinbergBenjamin W. Hattenbach

Kenneth J. Weatherwax

Mark A. KresselIRELL & MANELLA LLP

1800 Avenue of the Stars, Suite 900Los Angeles, CA 90067-4276Telephone: (310) 277-1010

Facsimile: (310) 203-7199

Barbara A. Murphy

F. David Foster

MILLER & CHEVALIER CHARTERED655 Fifteenth Street, N.W., Suite 900

Washington, DC 20005

Telephone: (202) 626-5800Facsimile: (202) 626-5801

COUNSEL FOR COMPLAINANT TESSERA, INC.

100759625_1.DOC


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EXHIBIT A


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UNITED STATES INTERNATIONAL TRADE COMMISSION

WASHINGTON, D.C. 20436

Before the Honorable Theodore R. Essex

Administrative Law Judge

In the Matter of

CERTAIN SEMICONDUCTOR CHIPS WITH

MINIMIZED CHIP PACKAGE SIZE AND

PRODUCTS CONTAINING SAME

Investigation No. 337-TA-605

COMPLAINANT TESSERAS REPLY IN SUPPORT OF

MOTION FOR FORFEITURE OF RESPONDENTS

BOND, LIMITED DISCOVERY, AND EVIDENTIARY HEARING


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Respondents had made public statements, including representations to the Federal Circuit, that

indicate that Respondents conducted a heavy volume of business in activities covered by the

Remedial Orders during the Presidential Review period. Not one Respondent denied that it has

posted bonds with Customsindeed, Freescale proudly defended its right to do soalthough no

Respondent came forward with information about how much it has actually posted. Not one

Respondent denied that Tessera was unable to determine the amount of bond that Respondents

should have posted.

Instead, Respondents argue that Tesseras motion is procedurally defective, premature,

or, more surprisingly, that the ITC lacks authority to permit discovery under a bond forfeiture

motion, even where evidence suggests that Respondents have flouted their obligations regarding

bonding under the Remedial Orders. Tessera explains below why each of these arguments lacks

both supporting authority and a basis in common sense. The ALJ should grant Tesseras motion

and begin bond forfeiture proceedings. If the ALJ has concerns about requiring the actual

forfeiture of funds while Respondents Federal Circuit appeal is pending, Tessera asks, as it did

in its motion, that the ALJ at least complete bond forfeiture proceedings through discovery and

an initial determination as to the amount forfeitable, and only stay the forfeiture pending the

outcome of the appeal.

II. AMPLE AUTHORITY SUPPORTS TESSERAS MOTION FOR BONDFORFEITURE AND AUTHORIZES DISCOVERY THEREON

Respondents arguments that Tesseras motion is procedurally improper or otherwise

unsupported by authority ignore the regulations and case law that explicitly authorize both the

motion and the relief Tessera seeks.


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A. Immediate Commencement Of Forfeiture Proceedings, Including OrderingForfeiture, Is Proper

1. ITC Rules Require Prompt Filing And Resolution Of A BondForfeiture Motion Notwithstanding Any Appeal

Respondents and Staff suggest that this is an inappropriate time for bond forfeiture

because an appeal is pending before the Federal Circuit. These parties ignore the express terms

of the Commissions rules governing bond forfeiture proceedings. ITC Rule 210.50(d) states:

If one or more respondents posts a bond pursuant to 19 U.S.C. 1337(e)(1)or 1337(j)(3), proceedings to determine whether a respondents bondshould be forfeited to a complainant in whole or part may be initiatedupon the filing of a motion, addressed to the administrative law judge wholast presided over the investigation,by a complainant within 90 days afterthe expiration of the period of Presidential review under 19 U.S.C.1337(j).

19 C.F.R. 210.50(d)(1)(i). The Presidential Review period in this Investigation expired on July

20, 2009. Accordingly, the 90 day window within which Tessera was required to move for bond

forfeiture, calculated pursuant to Commission rules, expired on October 19, 2009. Therefore, not

only is this not an inappropriate time to initiate bond forfeiture proceedings, but the

Commissions rulesrequiredTessera to file its motion at this time, or else be barred from ever

so filing.1 Notwithstanding any concerns about the possible risk that the Commissions remedial

orders will be vacated, the Commissions rules expressly require a Complainant to file a motion

for bond forfeiture while an appeal to the Federal Circuit is pending.2

1 Tessera notes as well that the Respondents had the same 90 day window in which to file a

motion for the return of their bonds in the event that the Federal Circuit were to vacate theCommissions Remedial Orders, yet failed to file such a motion. See 19 C.F.R. 210.50(d)(1)(ii) (A respondent may file a motion addressed to the administrative law judgewho last presided over the investigation for the return of its bond within 90 days after theexpiration of the Presidential review period under 19 U.S.C. 1337(j).).

2 Indeed, the Commissions commentary to its proposed revised rules state that theCommission specifically extended the deadline from 30 days to 90 days precisely in order to


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2. The ALJ May Grant Bond Forfeiture While An Appeal Is PendingRespondents and Staff argue that [n]either the applicable statutory provisions nor the

Commissions rules require forfeiture of Respondents bonds before the resolution of their

appeals. Staff Opp. at 3-4; accordSpansion Opp. at 3-4; Freescale Opp. at 3. Yet nothing in

the applicable statutory and regulatory provisions states that the Commission is prohibited from

ordering bond forfeiture while the Investigation is on appeal. See, e.g.,19 U.S.C. 1337(j)(3)

(If the determination becomes final,the bond may be forfeited to the Complainant.). More

importantly, nothing in these provisions states that Tessera was prohibited fromfiling its motion

for bond forfeiture while the Investigation is on appeal, nor could theyas discussed above, the

Commissions regulations explicitly required Tessera to file its motion by October 19, 2009, a

date before Respondents opening appellate brief was due. See 19 C.F.R. 210.50(d)(1)(i).3

accommodate the 60 day window in which a party could file an appeal to the Federal Circuit.See Notice of Proposed Rulemaking, 72 Fed. Reg. 72280, 72291 (Dec. 20, 2007). Given the

patent unlikelihood that an appeal to the Federal Circuit could be decided in its entirety in 30days, the Commissions decision to extend the time to file a bond forfeiture motion to only90 days indicates a deliberate decision torequire a complainant to file a bond forfeituremotion even if an appeal to the Federal Circuit is pending.

3 Freescales and Spansions reliance on Certain Lens-Fitted Film Packages (LFFP) for theproposition that the ALJ may not even begin forfeiture proceedings, much less orderforfeiture, while an appeal is pending is misplaced. See Fr. Opp. at 3 (citingLFFP, Inv. No.337-TA_406 (Remand), Bond Forfeiture Order at 1 (Sept. 15, 2004)); see also SpansionOpp. at 5. InLFFP, no party litigated whether bond forfeiture was proper while the appealwas pending; the Federal Circuits comments about the timing of bond forfeiture on remandthat were quoted in the Initial Determination are mere dicta and at best suggest that the courtassumed a stay of forfeiture was proper in that particular case. Similarly, Spansions relianceonMilan Express, Inc. v. Averitt Express, Inc., 208 F.3d 975 (11th Cir. 2000) is misplacedbecause the issue of whether the plaintiffcouldmove for bond forfeiture while the appealwas pending was not litigatedthe case merely demonstrates Milans individual litigationstrategy. Moreover, federal courts, unlike the ITC, lack the rule requiring that the movingparty file within 90 days of the expiration of the Presidential Review period; thus Milan,unlike Tessera, was notrequiredto seek bond forfeiture while the appeal was pending.


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Respondents and Staff also argue that the language of the Commissions CDO renders

Tesseras request for a bond forfeiture proceeding premature unless and until the Federal

Circuit decides the appeal in this case in favor of Tessera. Qualcomm Opp. at 8 (emphasis in

original); see also Fr. Opp. at 2; Staff Opp. at 4.4 This argument has several flaws. First, while

the language of the CDO does not say the ALJ isrequiredto grant a bond forfeiture motion

while the appeal of the Remedial Orders is pending, the language does not say the ALJ is

prohibitedfrom ordering forfeiture. The CDO merely acknowledges the common-sense

proposition that Respondents would be entitled to recover the bond amount should the Federal

Circuit vacate the Remedial Orders. The CDO permits the ALJ to require forfeiture now and

allow the Respondents to move for return of the bonds in the event they prevail on appeal.

Second, Respondents argument that Tesseras motion should be denied entirely under

the language of the CDO is premised on collapsing together the various steps of filing the

motion, conducting the bond forfeiture proceedings (including discovery and an evidentiary

hearing when necessary), and ordering the actual forfeiture in the amount determined through the

proceedings. Even if one concluded that the actual forfeiture is inappropriate while appeal of the

Remedial Orders is pending, the CDO in no way suggests that the mere filing of the bond

forfeiture motion, or the conducting of discovery and a hearing thereon, is prohibited while the

4 Qualcomm incorrectly characterizes the Commissions policy as that bond forfeitureproceedings are inappropriate when an appeal is pending. Qualcomm Opp. at 9 n. 36 (citing72 Fed. Reg. 72291). In fact, the Commissions policy as stated in the Notice of Proposedrule making is not that bond forfeiture proceedings are categorically inappropriate while anappeal is pending, but merely that such proceedings may not be appropriate in cases wherethe Federal Circuit reverses a Commission finding of violation. 72 Fed. Reg. 72291. Inthis case, the Federal Circuit has not reversed a Commission finding of violation. Indeed, theFederal Circuit has considered whether Respondents will be likely to succeed in their appealand concluded that they are not.


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appeal is pending. The language of the CDO permits the ALJ to order the start of forfeiture

proceedings while the appeal of the Remedial Orders is pending, even if the ALJ decides to defer

ordering the actual forfeiture until the appeal is complete. In light of the fact that the

Commissions rulesrequire a complainant to file a bond forfeiture motion while appeal is

pending, see 19 C.F.R. 210.50(d), this is the only possible interpretation of the CDO.

Third, Respondents and the Staffs reliance on the language of the CDO ignores the fact

that much of the injury to Tessera due to Respondents activities during the Presidential Review

period is due to violations of the LEO. Nothing in the LEO states that a bond forfeiture

proceeding, from filing through forfeiture, is improper while appeal is pending.

B. Tesseras Motion Sufficiently Alleges InjuryRespondents have created from whole cloth the unsupported and unsupportable

proposition that Tesseras motion should be denied outright because [f]ailure to set forth

essential factual allegations in a bond motion seeking recovery of damages under a bond,

including specific damages proximately caused by the order, requires denial of the bond

forfeiture motion. Qualcomm Opp. at 16; accordFr. Opp. at 7. Greenwood County v. Duke

Power Co., 107 F.2d 484, 489 (4th Cir. 1939), upon which Respondents purport to rely, is

inapposite. In that case, the court held that the party moving for bond forfeiture was not so

entitled because it had failed to articulate any theory of damages directly traceable to the

temporary injunction in and of itself, as opposed to general costs incurred due to the undertaking

of the litigation entirely. Greenwood County, 107 F.2d at 489. The defendants alleged loss

was the result of a delay (in constructing a power plant) of over three years duration while the

litigation progressed, but the temporary injunction lasted for only four months. See id. at 487-89.

In this Investigation, in contrast, Tessera seeks recovery for injuries directly traceable to

Respondents infringing activities during the Presidential Review period. Moreover, the courts


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primary reason in Greenwood County for denying forfeiture was that, at the time the case was

decided, bond forfeiture for an erroneous injunction was not proper absent evidence that the

plaintiff sought the injunction in bad faitha standard not applicable in this Investigation. See

107 F.2d at 489-90. Greenwood County says nothing about what allegations must be pled in an

initial motion that seeks the initiation of bond forfeiture proceedings.

Moreover, as a matter of policy, it makes no senseindeed would be wholly

impracticalto require a complainant to set forth all the facts necessary to prove the amount

forfeitable in the initial bond forfeiture motion. The purpose of the initial bond forfeiture motion

is merely to request the relief of bond forfeiture; the motion initiates proceedings, it does not

conclude them. See 19 C.F.R. 210.50(d)(1)(i) (proceedings to determine whether a

respondents bond should be forfeited to a complainant in whole or in partmay be initiated

upon the filing of a motion); 19 C.F.R. 210.50(d)(3) (A motion for forfeiture . . . will be

adjudicated by an administrative law judge in an initial determination . . . which shall be subject

to review . . . .). In many cases, it will be necessary to have additional proceedings, including

discovery and an evidentiary hearing, in order to determine what amount is due under the bond.

See Certain Lens-Fitted Film Packages, Inv. No. 337-TA-406 (Bond Forfeiture Proceeding)

(LFFP), Commn Bond Forfeiture Order, at 2-7 (Sept. 15, 2004). While it is true that Tessera

must eventually prove the amount of actual injury in order to prove the amount of bond to be

forfeited, nothing in the Commissions enabling statute, rules, or case law remotely suggests that

a complainant must satisfy this burden of proof with the very filing of its bond forfeiture motion.

Moreover, even if a proper bond motion were required to contain allegations of actual

injury (which it is not), Tesseras motion would be proper, as Tessera has made ample

allegations. First, Tessera explicitly alleged its theory of actual injury caused by Respondents


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activity during the Presidential Review period. As Tessera explained in its motion for forfeiture,

the ALJ determined in this Investigation that 3.5% of the value of entered products, as the

median royalty rate in the semiconductor industry, was an appropriate bond. See Tessera Mot. at

13.

Second, Tesseras motion alleged explicitly that Respondents imported infringing

products during the Presidential Review period. Tessera supported its motion with quotes from

Respondents own public statements indicating that Respondents had continued to import

infringing products during the periodstatements which Respondents made no attempt to

address in their Opposition Briefs. See Tessera Mot. at 2 (detailing Spansions claims of

significant sales prior to the end of the period), 8-9 (detailing Respondents representations to the

Federal Circuit that it was imperative that they maintain the same volume of business they had

conducted prior to and during the Presidential Review period during the appeal); 9 (detailing

trade publications evidencing high levels of importation of infringing products during the

Presidential Review period).

Tessera further supported its motion with quotations from Respondents own compliance

reportsreports which, in addition to evidencing that Respondents did, in fact, import infringing

products during the period, raise serious questions about whether Respondents bond postings

accurately reflect the number of infringing products imported and sold. See Tessera Mot. at 9.

Finally, Tessera supported its motion with evidence of ongoing sales or offers for sale of

infringing goods in the form of screenshots of Respondents websites. See Tessera Mot. at 2, 16.

C. Well-Settled Commission Precedent Establishes The Commissions AuthorityTo Authorize Discovery On A Bond Forfeiture Motion And The

Commissions Practice Of Doing So

Respondents are starkly incorrect when they state that Tessera cites no authority for its

demand for discovery. See Qualcomm Br. at 16; ST Opp. at 7. InLFFP, cited in the oppositions


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of every Respondent and the Staff, the Commission expressly referred the complainants bond

forfeiture motion to the ALJ for discovery and a hearing on the amount due. See LFFP,

Commn Bond Forfeiture Order at 2-6; ALJ ID, 2003 ITC LEXIS 408, *8-*11 (May 29, 2003)

(detailing how Commission referred the motion to the ALJ for an adjudication of the precise

amount due, and how discovery, including a motion to compel and document subpoenas, and

motion practice, including a motion in limine, followed). In fact, the Commission endorsed a

multi-stage proceeding, in which the ALJ first issued an Initial Determination on the amount

forfeitable, the complainant sought review of the ID by the Commission, the Commission

granted review andremandedforfurther proceedings and factual determinations, and ultimately

reviewed the [revised] determination by the ALJ. LFFP, Commn Bond Forfeiture Order at 2-6.

Rather than acknowledge this authority, Respondents simply argue, without any support,

that the Commission is not authorized to grant discovery as requested by Tessera. See

Qualcomm Br. at 16-17; ST Opp. at 2 ([T]here is no legal basis for the relief Tessera seeks.);

Fr. Opp. at 8 (Neither the statute nor the Commission rules authorize such an inquiry.). This

argument is directly contradicted by the Commissions own enabling statute, which states that

[t]he Commission shall prescribe the terms and conditions under which bonds may be forfeited

under this paragraph. 19 U.S.C. 1337(j)(3). Those terms and conditions may include

procedures sufficient to ensure that Respondents have posted the amount of bonds sufficient to

cover the amount of infringing products imported, as required by the Commissions Remedial

Orders, and to determine the amount of actual injury to Tessera caused by Respondents

activities. Indeed, the Staff implicitly agrees that the Commission has the authority to order

discovery and, if it appears warranted, an evidentiary hearing to determine whether Respondents

have posted the required amount of bond and how much should be forfeited. See Staff Opp. at 5-


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copyright case held two evidentiary hearings, including presentation of experts by both sides, to

determine amount forfeitable after vacating a preliminary injunction); Sionix Corp. v. Moorhead,

299 F. Supp. 2d 1082, 1085 (S.D. Cal. 2003) (stating that discovery relevant to the bond

forfeiture motion occurred).

The absurdity of Respondents position is inherently obvious: without any authority to

grant discovery into whether a respondent had posted the amount of bond required by the terms

of its own order, the Commission would be powerless to know if its orders were being flouted.

Respondents would have the Commission believe that it must simply take Respondents at their

word. Nothing in the Commissions statute or regulations prevents the Commission from using

discovery in these proceedings to determine whether Respondents have, in fact, posted the

appropriate amount of bond.5

D. Tessera Has Not Requested An Enforcement Proceeding In Its MotionRespondents attempt to undermine Tesseras request for discovery by mischaracterizing

Tesseras request as something more akin to an enforcement proceeding than a bond forfeiture

proceeding. See ST Opp. at 7. This attempt fails becauseLFFP demonstrates that bond

5 Qualcomms claim that there is no legal basis for Tesseras claim that it is entitled torecover more than the bonds already posted is similarly unfounded. See Qualcomm Opp. at18. The authority Qualcomm cites for the proposition that under Rule 65, recovery for actualdamages cannot exceed the amount of the bond are inapposite. These authorities assume thatthe amount of bond actually posted equaled the amount set by the court and do not considerwhat happens in a case such as this where Respondents may not have posted the amountrequired. See Qualcomm Opp. at 18 (citing, e.g.,Blumenthal v. Merrill Lynch, Pierce,Fenner & Smith, Inc., 910 F.2d 1049, 1056 (2d Cir. 1990) (reciting boilerplate instructionson remand in a case where the moving party did not allege that the opposing party failed topost the amounts required under the bonding order); Phillips Bus. Sys., Inc. v. ExecutiveCommunics. Sys., Inc., 744 F.2d 287, 290 (2d Cir. 1984) (denying movants attempt to obtaintriple damages over a bond amount based on a claim that the violations independentlytriggered antitrust liability in a case where the moving party did not allege that the opposingparty failed to post the amounts required under the bonding order).


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compensate Tessera for the actual injury suffered due to Respondents infringing activities

during the Presidential review period; yet the Respondents and Staffs briefs make clear that

discovery is the only way these facts will come to light.

A. Tessera Seeks Discovery Necessary To Resolve The Dispositive IssuesIn their attempt to distract from the need for discovery, Respondents claim that Tessera

seeks discovery on the amount of the bond, with the intention of relitigating the bond amount or

attempting to retroactively increase the amount of bond. Qualcomm Opp. at 17. Not so. As

the Staff accurately described, the central issue on which Tessera seeks discovery is

Respondents compliance with their bonding obligations and whether the amounts of any bonds

they have posted, including any bonds posted with Customs,accurately reflect the number of

packaged semiconductor chips imported and sold during the Presidential Review period.

Staff Opp. at 6. Indeed, recognizing the importance of this issue, the Staff conceded that if the

bond forfeiture proceeding should proceed, discovery could investigate the issues of (1) the

amount of any bonds posted with Customs, and (2) the number of products sold during the

Presidential Review period. Id. These are indeed among the issues upon which Tessera seeks

discovery, although Tessera submits that discovery as to the number of imports and into other

activities covered by the Remedial Orders during the Presidential Review period is also

appropriate.

B. Each Opposition Brief Demonstrates The Need For DiscoveryDespite the claims to the contrary, the Opposition Briefs themselves make clear that

discovery is absolutely necessary to determine whether the bonds posted accurately reflect the

number of infringing products imported during the Presidential Review period.


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1. FreescaleFreescales opposition takes issue with Tesseras position that Freescale was required to

post any import bonds with the Commission, but in doing essentially admits that Freescale has

indeed posted bonds with Customs. See Fr. Opp. at 6 (defending its right to post bonds with

Customs). Yet, while Freescale pointedly defends its right to post bonds with Customs,

Freescale never states that it has done so, nor does it admit how much it has posted. Instead,

Freescale coyly states that it has made every effort to comply with the Commissions orders,

including a bond submitted to the Commission. Fr. Opp. at 5. Freescales refusal to admit

how much it has posted with Customs, all the while insisting that no discovery is necessary, is

hardly the full and transparent manner of compliance of which Freescale boasts. Fr. Opp. at 5.

Elsewhere in its Opposition, Freescale argues that the fact that it never adjusted its bond

amount upward to accurately reflect the amount of products imported is just as reasonably

evidence that Freescale overestimated the amount of inventory bond required. Fr. Opp. at 9

(emphasis in original). Freescale will not represent that this is indeed the explanation for its

failure to adjust its bond amount; it merely represents that such an explanation is just as

reasonably consistent with the evidence. Freescales inconsistencies and misleading statements

further demonstrate that Tessera requires discovery in order to determine the amounts Freescale

has posted and whether these adequately reflect the amount of infringing activities conducted

during the Presidential Review period.

2. QualcommQualcomm argues that Tesseras motion is moot with respect to Qualcomm because

Qualcomm offered to stipulate to a forfeiture of the entire bond amount it had posted,

Qualcomm Opp. at 1, but this argument merely begs the critical question on which Tessera seeks

discovery: is the entire bond amount that Qualcomm posted adequate in relation to the amount of


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Qualcomms infringing activities during the Presidential Review period? Thus, Qualcomms

attempt to moot Tesseras motion is a circular argument that only further demonstrates that

Tessera needs discovery.

3. STST's opposition makes abundantly clear that Tessera needs discovery. ST claims that it

has not been required by CBP to post any bonds, a fact which Tessera does not dispute. ST

Opp. at 3. Tessera does indeed dispute whether ST was required to post bonds and Tessera seeks

discovery to determine whether any of STs activities during the Presidential Review period were

required to be conducted under bond, and, if so, what amount should have been posted and is

now forfeitable to Tessera. See Tessera Mot. at 7-8. Tessera is unable to determine whether ST

was required by CBP to post bonds without discovery, as it was not privy to communications

between CBP and ST. Moreover, as ST admits, Tessera asserts that it may be possible ST

shouldhave posted bonds, and Tessera seeks discovery necessary to determine that fact. See ST

Opp. at 4 (admitting Tessera asserts ST should have posted bonds and that Tessera provided

evidence in the form of screenshots of web pages demonstrating that ST offered for sale

infringing products).

4. SpansionSpansion is perhaps most brazen about its refusal to provide the evidence necessary to

determine amounts forfeitable to Tessera, and thus most probative of how necessary discovery is.

Spansion simply boasts, without citation to a single authority, that Spansion does not intend to

provide information on importation and bonding to Tessera, because they are not entitled to it.

Spansion Opp. at 9. Yet, throughout its brief, Spansion refuses to admit whether it has posted

any bonds, either with the ITC or Customs. Spansion also refuses to state whether itshouldhave

posted such bonds because of its activities. Moreover, Spansion refuses to evenaddress the


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5. StaffEven the Staffs Opposition exposes the fact that key facts necessary to determine the

amount forfeitable to Tessera remain unknown. The Staff stated that it understands that

Freescale and Qualcomm also have posted bonds with U.S. Customs and Border Control

(Customs) for products subject to the LEO and CDOs, although the Staff has not confirmed the

existence or amount of any such bonds. Staff Opp. at 2. Thus, the Staff believes that Freescale

and Qualcomm have posted bonds with Customs, which is more than Tessera was able to

determine, but even the Staff does not know the amounts posted. More troublingly, the Staff

concedes that Spansion does not appear to have posted any bond with the Commission, but the

Staff believes Spansion may have posted bonds with Customs. Id. As Spansion has not posted

any bonds with the Commission, absent discovery to determine the amount Spansion may have

posted with Customs, Tessera has no way of knowing with certainty how much is forfeitable by

Spansion.

IV. RESPONDENTS INDIVIDUALIZED CONCERNS ARE IRRELEVANT TO THEMERITS OF TESSERAS BOND FORFEITURE MOTION

Spansion, Qualcomm, and ST each raise individualized concerns. These arguments are

irrelevant make-weights that furnish no basis to deny Tesseras bond forfeiture motion.

Spansion claims that Tesseras motion is merely harassment, and argues that Tesseras

decision to file this motion now is an effort to thin Respondents resources during the appeal.

This argument is completely baseless: as discussed above, the Commissions rulesrequiredthat

Tessera file its bond forfeiture motion by October 19, 2009. See Part II.A, supra. The fact that

Tessera filed its motion while Respondents prepared their opening briefs was a coincidence

expressly required by the Commissions own rules.


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Spansions claims that Tessera is causing undue hardship to Spansion in multiple forums

is particularly disingenuous because it is Spansion who has sought to use the fact of its

bankruptcy to play a shell game, hiding the information about its infringing activities from

Tessera by arguing in each forum that Tessera should look for evidence of Spansions unlawful

actions in the other forum. See Ex. 1 (Debtors Objection To Motion Of Tessera, Inc. For Order

Pursuant To Bankruptcy Rule 2004 Compelling Examination Of A Designee Of The Debtors

Pursuant To Fed. R. Civ. P. 30(b)(6) And For The Production Of Documents,In re: Spansion,

Inc., No. 09-10690 (KJC) (Bankr. D. Del.), filed Aug. 5, 2009, at 6-7 (arguing that the ITC

investigation and not this bankruptcy action is the appropriate forum for discovery into

Spansions ongoing patent infringement)). In any event, the information Tessera seeks through

discovery on its bond forfeiture motion is directly related to this motion and not congruent in

scope with any information Tessera may seek in connection with Spansions bankruptcy. The

former relates to Spansions activities in violation of the Commissions remedial orders that took

place during the Presidential Review period; the latter relates to activities that may give rise to

administrative claims related to post-petition patent infringement, which may still be ongoing

today.

Like Spansion, Qualcomm tries to hide information about its infringing activities by

arguing Tessera must look under a different shellin Qualcomms case, arbitration proceedings

with Amkor. See Qualcomm Opp. 14-15. Like Spansions argument, this one fails because the

information Tessera seeks to discover for purposes of its bond forfeiture motion is, again, not

congruent with the information Tessera may seek in connection with its disputes with Amkor.

As discussed above, Tessera seeks discovery to determine: (1) the amount of activities prohibited

by the Commissions Remedial Orders that Qualcomm conducted during the Presidential Review


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the Presidential Review periods expiration because there would be no change in its activities as

the Remedial Orders went into effect.

Accordingly, STs arguments do not furnish a basis to deny Tesseras motion; instead,

STs boast that it has not posted any bonds, coupled with its refusal to provide proof that it has

not imported any products, merely furnishes further support for Tesseras request for discovery.

V. CONCLUSIONFor the foregoing reasons, Tessera respectfully asks the ALJ to grant its motion for bond

forfeiture and immediately begin bond forfeiture proceedings. If the ALJ prefers to delay

forfeiture pending appeal, however, Tessera asks that the ALJ at least permit the forfeiture

discovery starting immediately, conduct an evidentiary hearing, and rule on the forfeiture motion

immediately thereafter, and then delay only the actual requirement of forfeiture until the Federal

Circuit appeal has concluded.

Dated: November 10, 2009 Respectfully submitted,

/s/ Amanda Tessar

Wayne M. BarskyGIBSON, DUNN & CRUTCHER LLP2029 Century Park EastLos Angeles, California 90067Telephone: (310) 552-8500Facsimile: (310) 551-8741

Amanda TessarDavid GlandorfGIBSON, DUNN & CRUTCHER LLP1801 California Street Suite 4200Denver, CO 80202-2642Telephone: (303) 298-5742Facsimile: (303) 313-2826


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EXHIBIT 1


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I N T H E U N I T E D ST A T E S B A N K R U P T C Y C O U R T FO R T H E D I S T R IC T O F D E L A W A R EChap ter 11Case N o. : 09-10690 (KJC)Jointly Ad ministeredH earing D ate: August 11 a t 3 :30 p . m .Objection Deadline: August 4, 2009 at 4:00 p.m .2Related to D .I . 908

In re:.SPA N SION IN C. , et al.,1

Debtors.

D E B T O R S ' O B J E C T IO N T O M O T I O N O F T E S S E R A , IN C . F O R O R D E R P U R S U A N T T O B A N K R U P T C Y R U L E 2 00 4 C O M P E L L I N G E X A M I N A T IO N O F A D E S I G N E E O F T H E D E B T O R S P U R S U A N T T O FE D . R . C I V . P . 3 0 (B ) (6 ) A N D F O R T H E P R O D U C T IO N O F D O C U M E N T SThe above-cap t ioned debtors and de btors in possess ion ( the "Debtors"), by and

through their undersigned counsel, hereby file this objection (the "Objection") to theMotion Of Tessera, Inc. For Order Pursuant To Bankruptcy Rule 2004 CompellingExam ination Of A Designee O f T he De btors Pursuant To Fed. R. Civ. P. 30(b)(6) A ndFor The Production Of Documents [Docket No. 908] (the "Rule 2004 Motion"). Insupport of this Objection, the Debtors submit the Declaration Of Raymond Fritz InSupport Of Debtors' Objection To Motion Of Tessera, Inc. For Order Pursuant ToBankruptcy Rule 2004 Com pell ing Examinat ion Of A De signee Of The Debtors Pursuant1The Debtors in these cases, along with the last four digits of each Debtor's federal tax

ident if ica t ion number, a re : Spa ns ion Inc . , a D elaware corpo ra t ion (8239); Spans ion TechnologyLLC, a De laware l imi ted l iabi l ity compa ny (3982); Spansion LLC , a D elaware l imi ted l i abil itycompa ny (0482); Cer ium Labo rator ies LLC, a Delawa re l imi ted l i abil ity company (0482) , andSpansion International, Inc. , a Delaware corporation (7542). The mailing address for each Debtori s 915 DeG uigne Dr . , Sunnyvale , CA 94085.2esse ra , Inc. ("Tessera") granted the Debtors a one (I) day e xtens ion of t ime to re spond to theRule 2004 Motion. Accordingly, the objection deadline for the Debtors is August 5, 2009 at 12:00p . m .


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To Fed. R. Civ. P. 30(b)(6) And For The Production of Documents (the "FritzDeclaration"). 3n further supp ort of this Objection, the D ebtors state a s follows:

P R E L I M I N A R Y S T A T E M E N TTh e C our t s h ould deny th e Rule 2004 Mot ion for a t l eas t t h ree reas ons . F irs t , a s

Tessera conced es, it is seeking informa tion from th e De btors regarding non-bankrup tcyl it iga t ion ( i .e . , "ongoing infr ingeme nt of Tessera ' s [pa tents} in viola t ion of U.S. PatentLaw and th e ITC Ord e rs " ) . Rule 204 Mot ion T r9-10. Second, Tessera and the D ebtorshave been negotiat ing a resolution of the pending Patent Li tigat ions (def ined below), andTessera seek s inform at ion to gain an unfai r advantage in those neg ot ia t ions . Third, theextent of the requested discovery i s unduly burdensome. Wh i le any one of these rea sonsalone i s suff icient to support denial of the Rule 2004 Motion, col lect ively, they s tronglyweigh in favor of the C ourt 's exercising its discretion to deny Tessera relief .

B A C K G R O U N D1. Spansion is a leading worldwide manufacturer of flash memory

t echno logy. I t i s the large s t com pan y in the world dedicated e xclus ively to des igning,developing, manufactur ing, marketing and sel ling f lash me mory solutions. I t i s al so oneof the las t ma jor manufacturers of flash me mory rem aining in the United Sta tes .

2. On Janua ry 31, 2006, Tessera f i led an A me nded C omp laint in the Uni tedStates Dis t r ic t Court for the Northern Dis t r ic t of Cal i fornia ("District Court Action")agains t num erous de fendan ts , including Span sion Inc., Spansion Technology, Inc . andSpansion LLC (together, "Spansion"), al leging infr ingem ent of th e fol lowing f ive (5)pa tents: (i) U.S. Patent N o. 5,679,977; (i i) U.S. Paten t No . 5,852,326 (the "`326 patent");

A cop y of the F ritz Declaration is being filed contemp oraneously w ith the filing of this Objection.


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(iii) U.S. Patent No. 6,433,419 (the '419 patent"); (iv) U.S. Paten t No . 6,465,893; and(v) U.S. Patent No. 6,133,627. 4 Fri tz De cl . 2. These are the sam e paten ts tha t Tessera

defines in the Rule 2004 Motion as the "Patents-at-Issue."3. In Ap ri l 2007, Tessera f i led a complaint in the Uni ted States Internat ional

Trade C om mission ("ITC) aga inst num erous respo ndents including, Spa nsion, Inc. andSpans i on L L C, a l leg i ng in f r ingem ent o f the 419 pa ten t a nd the 3 26 pa ten t , InvestigationNo. 337-TA-605 (the "ITC Action" and together with the District Court Action, the"P atent L itigations"). Fritz Decl. 4.

4. Upon institution of the ITC Action, Tessera stipulated to a stay of theDis t r ic t Cour t A c t ion "unt i l th e de t e rm ina t ion of t h e ITC , including ap p ea l s , bec omesfinal." Fritz Decl. 5. An appeal in the ITC Action is pending and the stay in theDistrict Court Action rem ains in effect.

5. On Ma rch 1, 2009, each of the D ebtors, including Spansion Inc., Span sionTechnology, Inc. and Sp ansion. LLC, fi led voluntary pe ti tions for rel ief (collectively, the"C hap ter 11 C ases") under Ch apter 11 of t it le 11 of the United Sta tes Code, 11 U.S.C. 1 0 1 , et seq. ( the "B ankruptcy Code") with the Uni ted States Bankrup tcy Court for theDistrict of Delaware (the "Court"). Th e D eb tors a re op e ra t ing t h e ir bus ines ses andmana ging thei r prope r t ies as debtors in possession pursuant to sections 1107(a) and 1108of the Bankruptcy C ode .

6. On May 15, 2007, the ITC instituted an investigation pursuant to 19U.S.C. 1337, entitled In the M atter of Ce rtain Se m iconductor Chips with M inim izedChip Package Size and Products Containing Same, Inv. No. 337-TA-605 (the "ITC

4 Of these, a l l but Paten t No. 6 ,133,627 were asser ted agains t the Spansion defendants .


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Investigation"), identifying Spansion Inc. and Spansion LLC, among others, asrespondents .

7. On July 14, 2008, the Adm inist ra t ive Law Judge pres iding over the ITCAction, Judge Essex, comm enced a n evidentiary he ar ing in the ITC Invest igat ion, whichconcluded on July 18, 2008. On December 1, 2008, Judge Essex issued an InitialDetermination (the "ITC Initial Determination"), ruling that Spansion Inc. andSpansion LLC, am ong others , did not infr inge Tessera 's patents and , therefore, were notin violation of section 337 of the Tariff Act of 1930.

8 . On D ecember 15, 2008, Tessera f i led with the ITC a pe t i t ion to review theITC Ini t ial De termination. On January 30, 2009, the ITC issued a notice to review in par tJudge E ssex's decision finding no violation of section 337.

9. On May 20, 2009, the ITC issued (i) a Commission Opinion reversingJudge Essex's Initial Determination (the " C o m m is sio n O p i n io n " ) ; (ii) a LimitedExclusive Order ( the "L im ited E xclusion Order"); and ( i ii ) . a C ease a nd De sis t Orderagainst, inter alia, Spansion Inc. and Spa nsion LLC (the "Cease and D esist O rder" andtogether w i th the Limi ted Exclusion Order , the " I T C O r d e r" ) . Fri tz De,c1 . 7 . The ITCOrder prohibits Spansion, Inc. and Spansion LLC from engaging in certain activitiesincluding the imp ortat ion, sale, marketing, and a dver t i s ing of sem iconductor chips wi thminimized chip package size and products containing the same that infringe certainclaims of the '326 patent and the '419 patent . True and correct copies of the C omm issionOpinion, Limited Exclusion Order and Cease and Desist Order are attached hereto a sExhibit A, Exhibit B and Exhibit C, respectively, and are incorporated herein byreference.


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10. On July 20, 2009, Spansion, Inc . and Sp ansion LLC app ealed the ITC 'sdeterm ination to the Uni ted States Court of Appe als for the Federa l C i rcui t , Ap pea l No.

2009 -1460, -1461, -1462, -1465. That appeal is currently pending. Fri tz Dec1.1 8.11. As explained in further detail below, through its Rule 2004 Motion,

Tessera seeks authorization under Rule 2004 ("Rule 2004") of the Federal Rules ofBankruptcy Procedure to "discover" information that is directly related to the PatentLitigations. Specifically, the Rule 2004 Exam Topics (the "Exam Topics") and the Rule2004 Document R equests ( the "Document Requests") at tached to the R ule 2004 Motionas Exh ibi ts A an d B re spect ively, seek inform at ion. re la t ing to Tessera ' s c la im s in thePatent Litigations, which arise from the Debtors' alleged infringement of Tessera'spaten ts .

12. Prior to the Pate nt Li tigat ions, and up to and a f ter the ITC Order , Tesseraand the Debtors have engaged in negotiations to resolve the Patent Litigations. FritzD ecl . 10. In the Rule 200 4 Motion, Tessera a l so seeks information tha t wi ll g ive i t anunfair advantage in these settlement ne gotiations.

13. Indeed, dur ing t h e c ours e of t h es e s e t t l ement negot i a t ions , Tes s e ra h asas ked t h a t Sp ans ion p rov ide s ome of t h e ve ry s am e informa t ion as to sales that i t nowseeks to "discover" through the R ule 2004 Motion. Fri tz De cl. 12.

14. In addi t ion, through th e Rule 2004 M otion, Tessera re quests informa tionregar ding Spansion's com mu nicat ions wi th cus tom ers regard ing the effec ts of the ITCAction. See Exam Topic 27, Document R equest 12 Impo rtantly, Tessera ha s sent l e t tersto Spansion's sa les agents and cus tom ers regard ing the ITC decis ion, in what Spansionbel ieves is an a t tem pt to interfere w i th Spansion's business to force Spansion to se t t le

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Rules of C ivil Procedure ("Federal Rules"). Those are the prop er discovery vehicles forTessera to obtain the requested discovery not Rule 2004.

21. As a m atter of l aw, Rule 2004 discovery is not available and cannot beused to ci rcumve nt the ap pl icable provisions of the Federa l Rules w hen discovery i savai lable through related, pe nding l it igat ion. See In re Bennett Funding Group, Inc., 203B.R. 24 , 28 ( Bankr . N .D.N.Y. 1 996) ; see also In re W ashington Mutual, No. 08-12229(MFW), 2009 WL 1851120 (Bonkr . D. D el. June 24, 2009).

22. Admittedly, Rule 2004 is the "basic discovery device" available in abankruptcy case. Se e In re B ennett Funding Group, Inc., 203 B.R . a t 28. However, i t sapplication is not without boundaries. Id.Rule 2004 discovery is particularlyinappropriate wh en, as he re, discovery i s sought f rom "par t ies to" or those "affected by"the related litigation. Id at 29 . Tessera and Spansion are such pa r t ies and are ef fec ted bythe Patent Litigations.

23. I t is well recognized that once a n adversary procee ding or contested matterh as been c omme nc ed, d is covery i s made p urs uant t o t h e Fede ra l Rules , r a th e r t h an byRule 2004. 5ee W ashington Mutual, 2009 WL 18 51120 a t * 5; In re B enne tt FundingGroup, Inc., 203 B.R. at 28. See also In re Enron Corp., 281 B.R. 836, 840 (Bankr .S.D.N.Y. 2002); In re 2435 Plainfield Ave., Inc., 223 B.R. 440, 455-56 (Bankr. D.N.J.1998 ) (collecting cases); Intercontinental Enters., Inc. v. K eller (In re B linder, Robinson

The l imita t ions p laced on Rule 2004 discovery a re imposed , in pa r t , because a pa r ty subjec t to aRule 2004 examina t ionwhich is a " f ree and e asy prac t ice"does not enjoy the same r igh ts andpr ivi leges a s a pa r ty subject to d iscovery under the Federal R ules . See, e.g., In re Enron Corp.,281 B.R. a t 841 (cita t ions omi t ted) (not ing the res t r ic ted abi l ity to object to re levance an d thebroad scope of inquiry under a Rule 2004 exam ina t ion); In re Dinublio, 177 B.R. 932, 939-40 &n.12 (E.D. Cal. 1993) (exp laining that, in certain circumstances, a Rule 200 4 "witness has no rightto be represented by counsel except at the [court 's discretion]there is only a limited right toand no right to have issues defined beforeh and.").5


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Topics and Document Requests will lead to the discovery of evidence related to thePatent Li t igat ions or wheth er the y wi l l l ead to the discovery of evidence unrelated to thePatent Litigations.

26. In Bennet t , t h e c our t denied a R ule 2004 mot ion bec aus e t h e reqUes t edexa mination would " involve issues and pa r t ies wi thin the scope o f a pending adve rsaryproceeding." B enne tt Funding Group, Inc., 203 B.R. at 30. The trustee alleged in anadversary p roceeding that the defenda nts had diver ted cer tain assets f rom the debtor forconstruction of a hotel and racetrack. Id. a t 26 . Th e Rule 2004 mot ion s ough t , am ongother things, information generally related to the same defendants' bank accounts,ownersh i p o f p roper ty , and t r ansfe r s o f funds from th e debto r tha t were i nvol ved i n thepending adversary litigation. Id. at 29. Despite the trustee's assertion that it soughtexam ination only of matte rs necessary to ful ly ascer tain the e xtent of the de btor 's es tate,the court denied the motion after noting the "likelihood" that the examination would"delv[e] in to i ssues" covered by th e a dversary p roceeding and h eld that i t was l ikely that"information elicited will relate directly to issues and parties already named in theadversary p roceed i ng ." Id. at 29-30.

27. Here, the Rule 2004 Exam Topics and Docume nt Requests are des igned toel ic it informa t ion tha t wi l l re la te specif ical ly and di re c t ly to issues and par t ies a l readyidenti f ied in the p ending Pate nt Li t igat ions. Therefore, the R ule 2004 Motion should bedenied.

28 . Tessera 's Exam Topics and Docum ent Re quests are focused on obtainingtechnical informa tion, ma rketing informa tion, customer re lat ions informa tion and evenl it iga t ion s t ra tegy re la ted to Tessera ' s pa tent infr ingeme nt c la ims in the p ending Pate nt

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ITC's Order; Document R equest 18 a sks for documents regarding changes to adver t i s ingand m arketing mater ials to comply wi th the ITC 's Order; and Document R equest 23 asksfor all documents concerning the ITC investigation.

33. Other D ocument Requests do not refer to the Patent Li t igat ions by name ,but mere ly refer to "Covere d Products ," "Accused Products ," 13GA" or "LGA," each ofwhich re la te to the pending Patent Li t igat ions . For exam ple , Docume nt Reques t No . 3seeks the p roduc t ion of " Docum e nts su f fi ci en t to show the G eom et r i c Di m ens i ons andMaterial Properties of each of Your Covered Products or Accused Products." ThisDocum ent R equest seeks techn ical informa tion concerning Spansion 's products in orderto determine whether certain products infringe so that Tessera can better pursue thepending Pa tent Litigations.

34. A num ber o f p roper p rocedures ex i st to address T essera 's s ta ted pu rposefor its requested R ule 2004 Exam ination. The ITC has informa l (19 C .F.R. 210.75(a)) ,form al (19 C .F.R. 210.75(b)) , and D is tr ic t Court (19 C .F.R. 210.75(c)) proced ures fordiscovery to address any allege d violation of an ITC exclusion order or an ITC cease a nddes i st o rde r . In t h e Dis t r ic t Cour t Tes s e ra ma y s eek d i s covery in ac c ordanc e wi th t h eF edera l Ru l es . Those d i scovery m ethods shou l d be used h ere , no t Ru l e 2004 . A s s ta tedby the court in Hapewells Int? Insurance, where there is "a separa te p roceeding pending,pa r t ies [seeking discovery] are rem i t ted to the disclosure proce dures tha t exis t in thoseproceedings." 258 B.R. at 587.

35. No doubt, in its reply, Tessera will be able to point to a sliver ofinformation here or there that it will argue does not relate directly to the PatentLit igat ions . However, the discovery should s t i ll be de nied because , as found in Bennet t

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information through its Rule 2004 requests for the purposes of gaining an advantage in itsnegotiations with the D ebtors.

39. Anothe r area of in terest to Tessera in the negotiat ions is the e ffect of theITC's Order on the D ebtors and thei r cus tomers . Tessera has a l ready sent le t te rs to theDe b tors ' s a l e s agent s and c us tome rs about t h e ITC O rde r in wh a t i s be l ieved to be anat temp t to disrupt the D ebtors ' business and pressure the D ebtors to set t l e . Fr itz Dec1.1114, 15. Tessera should not be able to use Rule 2004 to determine the extent to whichT essera has da m aged the D ebto rs ' bus iness as par t o f an e f fo rt to nego t ia te a f avorableresolution of the l i tigations. Obviously, the more Tessera can see into Debtors' plans, thebet ter Tesse ra wi l l be able to nego tiate; who wouldn' t want to see the oth er s ide 's cardswhen playing poker?

40. For examp le, Exam Topic 27 asks about how the D ebtors are deal ing with"customers, prospective customers or vendors" in view of the ITC Order; Topic 31re l a t e s to c h anges De b tors made or c ons ide red m aking to t h e i r webs i te ad ve r t is ing ormarketing materials in view of the ITC Order; Topic 20 asks for a deposition on"adver t i sem ent, marke ting or sol ici tat ion of sales" af ter the ITC Orde r was i ssued; andT opi c 31 r e l a tes to " cons idera t i ons o f whether to p os t a bond" i n the IT C , a m e asu re o fhow effective the ITC O rder is in disrupting the D ebtors ' business.

41. "Rule 2004 provides that the Court 'may' order disclosure thereunder,giving the Court significant discretion" to grant or deny a request for a Rule 2004examination. " Hopewell Int? Insurance Ltd., 258 B.R. at 587. Because Rule 2004exam i na t i on i s b roader i n scope tha n d i scovery pe rm i t ted under the F edera l Ru l es , "theone seeking to conduct a 2004 exa minat ion has the burden of showing good cause for the

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exam inat ion in which it seeks ." In re Eagle -Picher Industries, Inc. e t al . , 169 B.R. 130,134 (Bankr . S.D. Ohio 1994). Tessera h as fai led to show "good cause" to conduct a 2004exam ination of Spansion.

42. Rule 2004 i s not wi thout its l imi ts and m ay not be used to abuse or harass .Se e W ashington Mutual , Inc. , 2009 W L 1 851 1 20, a t *3 (t h e re a re " limi t s t o t h e us e ofRule 2004 exam inations . . . i t may not be used for 'purposes of abuse or h arassment ' andit 'cannot stray into matters which are not relevant to the basic inquiry') (citationsomit ted); see also Bennett Funding Group, 203 B.R. at 28 (the "application [of Rule2004] is not without bounds").

43. "[C]ourts have also recognized that Rule 2004 examinations may bei nappropr i a te 'where the par ty r eq ues t i ng the R u le 2004 exam i na t ion cou l d benef it the i rpending litigation outside of the bankruptcy court against the proposed Rule 2004examinee W ashington M utual, 2009 WL 1851120 at * 4 (citing In re Enron Corp.,281 B .R. a t 842); see also Sny der, 18 1 B . R. a t 42, aff 'd sub nom., In re S nyde r, 52 F.3d1067 (5th C i r . 1995) (me m.) (character izing the use o f Rule 2004 to fur ther a s tate cour taction as an "abuse" of Rule 2004 .)

44. This Court should not exercise its discretion under Rule 2004 to allowTessera to gain a compe ti tive advantage over the D ebtors . The "expa nsive nature of R ule2004 should not be pe rmi t ted to exact pre judice or injust ice on the subpoena ed pa r ty ." I nre S um m it Global L ogistics, No. 08-11566 (DHS), 2008 WL 1 446722, at *3 (Bankr . D.N.J. April 9, 2008) (one "considera tion is the va lue of the informa tion to the issuing partyin compar ison to the burden imposed on the subpoenaed p ar ty .") .

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C O N C L U S I O NBased on the a bove reasons, the De btors respectful ly request that the C ourt deny

in i ts ent i rety Tessera 's Motion For Order Pursuant to Bankruptcy R ule 2004 C ompe l lingExaminat ion of a D esignee of the Debtors .

Da ted: August 5 , 2009Wilmington, D elaware Resp ectfully Submitted,By:Michael R . Lastowski (No. 3892)Richard W . Riley (No. 4052)

Somm er L. Ross (No. 4598)DUA N E MORR IS, L IP1100 North Market Street ,Suite 1200Wilmington, Delaware 19801Telephone : (302) 657-4900Facsimile . (302) 657-4901ATTORN EY S FOR THE DEBTORSAND DEBTORS-IN-POSSESSIONandEthan HorwitzJill Wasserma nKing & Sp alding LLP1185 Ave of the Am er icasNew York, NY 10036SPECIAL LITIGATION COUNSELFOR THE DEBTORS ANDDEBTORS-IN-POSSESSION

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