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Obalon Therapeutics Inc. v. Polyzen, Inc.

United States District Court, E.D. North Carolina, Western Division

March 6, 2017

OBALON THERAPEUTICS, INC., Petitioner,
v.
POLYZEN, INC. Objector.

          ORDER

          LOUISE W. FLANAGAN UNITED STATES DISTRICT JUDGE.

         This matter came before the court on February 17, 2017, for hearing on petitioner's petition to perpetuate testimony pursuant to Federal Rule of Civil Procedure 27 (DE 1), at which objector, Polyzen, Inc. (“Polyzen”), appeared through counsel in opposition to the petition. Upon the petition, response by Polyzen, and statements of counsel, the court allowed the petition, with written order forthcoming. This order serves to memorialize and explain the court's oral ruling, and sets forth terms and conditions for perpetuation of the subject testimony.

         BACKGROUND

         Petitioner filed the instant verified petition under seal on February 1, 2017, pursuant to Federal Rule of Civil Procedure 27, for an order authorizing it to depose Douglas C. Sampson (“Sampson”) in order to perpetuate testimony that might otherwise be lost, in light of Sampson's ill health. Petitioner asserts that Sampson will testify concerning his inventive contributions to two patents owned by Polyzen, United States Patent Nos. 7, 682, 306 and 7, 883, 491 (hereinafter “Polyzen's patents”). Petitioner expects Polyzen to commence a patent infringement action against petitioner, on the basis of a July 2016 letter from Polyzen to petitioner suggesting that petitioner should take a license from Polyzen in connection with petitioner's gastric balloon product. Petitioner asserts that it will offer Sampson's testimony in defense of any infringement suit filed, but that it cannot cause Polyzen to commence a suit.

         Given the exigent circumstances presented, the court by text order shortened the hearing time prescribed by Rule 27, set the matter for hearing by telephone, and directed petitioner to serve a copy of the court's order upon Polyzen. Petitioner filed proposed order on February 8, 2017. On February 16, 2017, counsel for Polyzen entered appearances and filed a memorandum in opposition to the petition. At telephonic hearing, the court heard statements by counsel and allowed the petition.

         COURT'S DISCUSSION

         A. Applicable Law

         Rule 27 provides a procedure “before an action is filed” for obtaining testimony by deposition of a witness. See Fed.R.Civ.P. 27(a). In particular, “[a] person who wants to perpetuate testimony about any matter cognizable in a United States court may file a verified petition in the district court for the district where any expected advers e p a r t y r e s i d e s . ” I d . “The petition must ask for an order authorizing the petitioner to depose the named persons in order to perpetuate their testimony.” Id. “The petition must be titled in the petitioner's name and must show” the following:

(A) that the petitioner expects to be a party to an action cognizable in a United States court but cannot presently bring it or cause it to be brought; (B) the subject matter of the expected action and the petitioner's interest; (C) the facts that the petitioner wants to establish by the proposed testimony and the reasons to perpetuate it; (D) the names or a description of the persons whom the petitioner expects to be adverse parties and their addresses, so far as known; and (E) the name, address, and expected substance of the testimony of each deponent.

Fed. R. Civ. P. 27(a)(1).

         With respect to court review of a petition, Rule 27 states that “[i]f satisfied that perpetuating the testimony may prevent a failure or delay of justice, the court must issue an order that designates or describes the persons whose depositions may be taken, specifies the subject matter of the examinations, and states whether the depositions will be taken orally or by written interrogatories.” Fed.R.Civ.P. 27(a)(3). “The depositions may then be taken under [the Federal Rules of Civil Procedure], and the court may issue orders like those authorized by Rules 34 and 35.” Id.

         The Fourth Circuit has applied Rule 27 once, in Application of Deiulemar Compagnia Di Navigazione S.p.A. v. M/V Allegra, 198 F.3d 473, 484 (4th Cir. 1999). “Rule 27 properly applies only in that special category of cases where it is necessary to prevent testimony from being lost.” Id. (quotations omitted). “Rule 27 is not a substitute for broad discovery, nor is it designed as a means of ascertaining facts for drafting a complaint.” Id. at 485 (citations omitted). “A petitioner must know the substance of the evidence it seeks before it can invoke Rule 27 perpetuation.” Id. at 486. “[T]he judge's discretion encompasses the nature and quality of evidence required to make or rebut the required showing in Rule 27(a)(1).” Id. B. Application The instant petition meets the requirements of Rule 27. As required by the rule, it is verified and was filed in this district where Polyzen resides. It asks for an order authorizing the petitioner to depose Sampson. It also includes the components enumerated in Rule 27, detailed in turn below, and it satisfies the court that perpetuating testimony may prevent a failure or delay of justice.

         1. Expected Party in Cognizable Action

         Petitioner has shown that it expects to be a party in a patent infringement suit by Polyzen, which is cognizable in this court, on the basis of a letter sent by Polyzen's counsel to petitioner in July 2016, suggesting that Obalon should take a license from Polyzen for Obalon's gastric balloon product. Petitioner also has shown that it cannot bring ...


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