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Sasol North America, Inc. v. Kansas State Institute for Commercialization

United States District Court, D. Kansas

August 8, 2014

SASOL NORTH AMERICA, INC., et al., Movants,
v.
KANSAS STATE INSTITUTE FOR COMMERCIALIZATION, et al., Respondents.

MEMORANDUM AND ORDER

KAREN M. HUMPHREYS, Magistrate Judge.

This matter is before the court on movants' motion to compel compliance with their third party subpoena to respondents (Doc. 1). As explained in greater detail below the motion is GRANTED IN PART and DENIED IN PART.

Background[1]

This motion arises from a subpoena issued in a patent infringement and trade secret case currently pending in the Southern District of Texas, Sasol North America et al v. GTLpetrol LLC, et al. [2] The subject of that dispute is the technology for converting natural gas to higher value liquid fuel, a process known as "gas to liquid" ("GTL"). Sasol Technology is a South African energy and chemical company which expanded into the United States with its Sasol North America branch (collectively referred to as "Sasol"). Sasol plans to build a $20 billion "gas to liquid" ("GTL") natural gas processing facility in Louisiana and is managing the project from Houston, Texas.

The crux of the Texas matter is whether the process to be utilized in Sasol's facility infringes upon the GTL process patent held by GTLpetrol LLC ("Petrol"), a patent holding company whose purpose is the marketing and enforcement of its intellectual property. In 2010-2011, Sasol entered into discussions with Petrol to determine whether the two might partner in Sasol's expansion into the United States, but Sasol later decided not to pursue the business relationship. In December 2012 Sasol announced its plans to build the Louisiana facility and in March 2013 Petrol sent Sasol its first "cease and desist" letter claiming that the planned facility would infringe on Petrol's trade secrets and GTL patented technology. Sasol then filed the Texas action in October 2013 seeking a declaratory judgment that, inter alia, Petrol's patent claims are invalid, that Sasol's construction and operation of the GTL plant have not and will not infringe any valid patent claims, and that Sasol has not misappropriated any Petrol trade secrets.

Both the Texas case and this matter are complicated by the relationships between Petrol and the third parties from which documents have been subpoenaed. Sasol seeks documents from a list of non-party entities that specialize in the marketing and/or enforcement of intellectual property. These non-parties are collectively referred to by both parties as Kansas State University Institute for Commercialization ("KSU-IC").[3] An abbreviated timeline of the entities' relevant business activity is as follows:

• September 2001: Filing of U.S. Patent No. 6, 534, 551 ("Patent 551'"), titled "Process and apparatus for the production of synthesis gas." This patent is a subject of the 2006 Exclusive License Agreement between KSU-IC and Petrol and is the patent specifically referenced in Petrol's written demands to Sasol.[4]
• 2003: Air Products & Chemicals, Inc., a Pennsylvania-based company, donates[5] EHTR[6] technology and GTL-related patents to KSU-IC, known as Mid-America Commercialization Corporation ("MACC") at that time ( see n.4).
• August 2006: Petrol is organized.
• September 2006: KSU-IC, known as the National Institute for Strategic Technology Acquisition and Commercialization ("NISTAC") at that time ( see n.4) licenses the EHTR technology to Petrol.[7]
• May 2010-2011: Sasol and Petrol discuss a possible business relationship including executing a confidentiality agreement.
• December 2012: Sasol announces its plans to build the Louisiana facility. In its Certificate of Interested Parties filed in the Texas action, Petrol identifies both KSU-IC and respondent Mid-American Technology Management, Inc. ("MTM") as the only entities aside from Petrol with a financial interest in the outcome of the Texas litigation.[8]

Sasol's Motion to Compel Compliance (Doc. 1)

Consistent with Fed.R.Civ.P. 45, Sasol served its document subpoena on non-party KSU-IC on March 26, 2014, to which KSU-IC responded by letter on April 9, 2014. After multiple communications between the parties, KSU-IC failed to produce any requested documents. Sasol filed its motion to compel in this court as required by Fed.R.Civ.P. 45(d)(2)(B)(i) on May 20, 2014. On June 18, 2014 the court held a telephone conference to discuss the pending motion, and at the court's direction, counsel for Sasol submitted to KSU-IC nine proposed search terms to be used in the production of electronically stored information ("ESI") and other documents responsive to the subpoena. The parties did not agree on the usage or scope of the search terms and after further review of the June 25, 2014 correspondence from both counsel, the court is now prepared to rule.

A. Sasol's Requests

The subpoena required KSU-IC to produce by April 10, 2014 any documents responsive to 50 separate requests which Sasol divides ...


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