IN RE: Data General Corp. Antitrust Litigation

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JD nN .
| | MULTI EAL PANE oy 5
Co =i LUTE a Coa. LED : .
BEFORE THE JUDICIAL PANEL em Co
ON RAY	~1 p97 A	73 ;
MULTIDISTRICT LITIGATION PATRICIA rn. NY ee : :	CLERA GF Fim laza SERATRENS
IN RE DATA GENERAL CORPORATION ) DOCKET NO. 369 = PANEL
ANTITRUST LITIGATION )
OPINION AND ORDER
BEFORE MURRAY	I. GURFEIN, CHAIRMAN, AND EDWIN A. ROBSON, EEE
- STANLEY A. WEIGEL, ANDREW A. CAFFREY, ROY W. HARPER, AND co Tr
CHARLES R. WEINER, JUDGES OF THE PANEL. EE
PER CURIAM RE
This litigation consists of six actions pending in
three districts: three actions in the Northern District
of California, two actions in the District of New Jersey,
and one action in the Central District of California. Data
General Corporation {Data General) is a party to each of Co
the six actions.
One of the actions in New Jersey (the New Jersey antitrust EE
action) was originally filed in August, 1978, in the District :
of Massachusetts and was recently transferred to the
District of New Jersey pursuant to 28 U.S.C. §1404(a).
In this action, Data General is seeking a declaratory judgment :
against Ampex Corporation (Ampex). Data General states co
in the complaint that it manufactures minicomputers and
microcomputers that are smaller and less expensive forms
of general purpose digital computers. Data General markets
a line of these small computers under the trademark ''NOVA'",

Case MDL No. 369 Document 2 Filed 05/04/15 Page 2 of 28 +
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along with related peripheral devices and related system
\ : . )
software.L/ Data General further states that for a NOVA
, to function as a general purpose digital computer, it'must a
consist of a central processing unit (CPU), main memory
2/
(or primary storage), power supply, chassis and operating
system software. Data General asserts that the CPU, main Co
memory and operating system software constitute a single pa BEEHE
product which is commonly referred to as a computer. oo :
Data General seeks a determination in the New Jersey
antitrust action whether: 1) Data General's sale of NOVA
minicomputers consisting of a CPU and a minimum amount of main
memory constitutes an unlawful tying arrangement in violation ¢ B :
the federal antitrust laws; 2) Data General's licensing
practices with respect to NOVA software, including Data
General's policy of imposing little or no charge for its So
software license when a minimum amount of Data General computer
equipment is purchased and Data General's policy prohibiting
use of the licensed software on non-Data General products, :
constitute an illegal tying arrangement in violation of :
the federal antitrust laws; 3) Data General's marketing
17 Data General states in its complaint that its software
1s specially designed as a fundamental set of instructions
basic to the operation of Data General's computer for any : :
practical application. 3 ~
2/ Data General explains in its complaint that main memory
{which consists of one or more memory boards composed of
electromagnetic and/or electronic components mounted on
a printed circuit) stores the operating system, as well
as the application programs and data actually being processed
by the CPU, during the data processing cycle.

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@® and licensing practices have created, in violation of the
federal antitrust laws, an unreasonable restraint of trade
in the sale of memory boards and other computer products;
and 4) Data General made false and misleading statements
about Ampex's financial soundness and integrity to potential
purchasers of Ampex's products.
The other New Jersey action (the New Jersey trade secrets
action), filed in March, 1977, was also brought by Data General
against Ampex. Data General alleges that Ampex has wrongfully
used Data General's memory unit trade secrets which Data
General had disclosed to Ampex in order to allow Ampex to
manufacture memory units for Data General. More specifically,
: C Data General charges that Ampex unlawfully disclosed thesubject matter of Data General's trade secrets to a third
party competitor of Data General for the purpose of allowing
Ampex and the third party competitor to compete unfairly
with Data General.
The first of the three actions in the Northern District
of California was brought in June, 1978, by Digidyne Corporation
(Digidyne) against Data General, Data General's president
and various unnamed defendants. Digidyne alleges that Data
General maliciously and slanderocusly stated to Ampex and
other Digidyne customers that Digidyne had used trade secrets
and proprietary information of Data General in connection
with the design and manufacture of a Digidyne computer.
®

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Digidyne subsequently amended its complaint to allege that:
1) Data General had illegally tied purchase of its software
with purchase of a CPU in violation of the federal antitrust
laws; and 2) Data General had attempted to monopolize the
business of manufacturing NOVA-compatible computers by means
of abuse of copyright laws and licensing agreements and
by threats of lawsuits to potential purchasers of NOVA-
compatible computers.
The second action in the Northern District of California
was filed by SCI Systems, Inc. (SCI) against Data General
in October, 1978. SCI claims that Data General's practice
of licensing its software only for use with NOVA computers, ®and Data General's alleged practice of intentionally designing
and marketing NOVA computers and NOVA software in such a manner
that it is technologically and financially impracticable
for Data General's customers to design their own software,
constitute unlawful tying arrangements in violation of the
federal antitrust laws. SCI also alleges that Data General
has engaged in a systematic program of harassing manufacturers
of NOVA-compatible computers for the purpose of restraining
competition by bringing groundless actions against other
manufacturers, including SCI, for misappropriating trade
secrets and for breaching and inducing breach of Data General
licenses. Finally, SCI charges that Data General, in acquirin
the assets of another computer manufacturer, has monopolized ®
attempted to monopolize the NOVA-compatible computer market.

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® The third Northern District of California action was
filed by Fairchild Camera and Instrument Corporation (Fairchild)
against Data General in October, 1978, Fairchild alleges
that Data General's software licensing agreements constitute
illegal tying arrangements under the federal antitrust laws,
and that Data General has attempted to eliminate competition
from Fairchild and other manufacturers in the market for
NOVA-compatible computers by means of abuse of copyright
laws and licensing agreements and by litigation and threats
of litigation to manufacturers of NOVA-compatible computers
and to the manufacturers' potential customers.
The three Northern District of California actions have
C been consolidated by the district court for the purpose
of pretrial discovery proceedings.
The Central District of California action was brought
in October, 1978, by Bytronix Corporation (Bytronix) against
Data General. Bytronix alleges that 1) Data General has
restrained competition in the market for minicomputer CPU's
by asserting that manufacturers of NOVA-compatible CPU's
are violating Data General's trade secrets; 2) Data General's
software licensing agreements constitute illegal tying arrange-
ments under the federal antitrust laws; 3) Data General's
marketing policies and practices have unreasonably restrained
trade in the sale of CPU's; and 4) Data General is violating -
C the California Business and Professions Code by greatlyreducing the price of Data General's licenses to purchasers

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of its other equipment and by providing less than adequate ®
service to equipment Data General sells if that equipment
is used in connection with equipment sold by Data General's
competitors.
Pursuant to 28 U.S.C. §1407, Data General moves the
Panel to transfer the four California actions3/ and the
New Jersey antitrust action to the District of Massachusetts
for coordinated or consolidated pretrial proceedings.
Bytronix, SCI and Fairchild do not oppose centralization
under Section 1407, but they do oppose selection of the
District of Massachusetts	as the transferee forum. SCI
and Fairchild support selection of the Northern District
of California as the transferee forum, and Bytronix favors ®either that district or the Central District of California.
Ampex and Digidyne oppose transfer. If the Panel orders
centralization under Section 1407, however, Ampex and
Digidyne both support selection of the Northern District
of California as the transferee forum. Also, in the
event of transfer, Ampex favors inclusion of the New Jersey
4/
trade secrets action in the Section 1407 proceedings.
Data General opposes inclusion of that action.
37 Although there was some ambiguity in Data General's motion
as to whether the non-antitrust claims in the Digidyne action
in the Northern District of California were i neToded in
the motion, that ambiguity becomes academic in light of
our decision to centralize the actions in this docket in
that district and the attendant reality that those claims
will be pending before the transferee court in any event. C4/ We have considered the New Jersey trade secrets action
Tor inclusion in our present transfer order because all
parties in that action have presented written and oral
argument on whether that action should be included in our
transfer order. Thus, the requirements of Rule 13(b),
?.P.J.P.M.L.. 78 F.R.D. 561, 571 (1978), have been satisfied.

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® We find that these six actions raise common questions
of fact and that transfer under Section 1407 to the Northern
District of California will best serve the convenience of
the parties and witnesses and promote the just and efficient
conduct of the litigation.
Ampex and Digidyne deny that the four California actions
and the two New Jersey actions share any common questions
of fact that are sufficiently complex or time-consuming
to warrant transfer under Section 1407. These opponents
argue that the products, technology and market at issue
in the California actions involve CPU's and are different
from the products, technology and market in the New Jersey
® actions, which primarily involve memory units. These
opponents urge that voluntary cooperation among the parties,
counsel and courts is preferable to transfer under Section
1407. Data General maintains that the New Jersey trade
secrets action involves factual questions which are distinct
from those in the other actions in this docket, and that
therefore the New Jersey trade secrets action should be
excluded from any centralized pretrial proceedings ordered
by the Panel.
We are unpersuaded by these contentions. The California
actions and the New Jersey antitrust action all share
questions of fact concerning the following: Data General's
C marketing of the computer equipment Data General manufactures,including Data General's licensing of software Data General
has developed; the computer market; Data General's economic

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®
+ power in the computer market; and whether Data General's
marketing and licensing practices have unreasonably restrained
trade in the sale of computers. This commonality of factual
questions springs from the reality that Ampex, Bytronix,
Digidyne, Fairchild and SCI all market Data General compatible
devices which depend for their success upon their ability
to function technologically with Data General equipment
at an economically competitive price. Any difference in
the particular product involved in each action does not
negate this commonality. Transfer under Section 1407 is
thus necessary in order to prevent duplication of discovery,
avoid inconsistent pretrial rulings, and economize judicial Ceffort. See, e.g., In re IBM Peripheral EDP Devices Antitrust
Litigation, 394 F.Supp. 796, 797 (J.P.M.L. 1975).
‘We find that the New Jersey trade secrets action should
also be included in the centralized pretrial proceedings
in this docket. An understanding of complicated principles
of computer technology will be necessary in both the trade
secrets action and the antitrust actions. Furthermore,
the type of conduct evidenced by Data General in asserting
its trade secrets claim in the New Jersey action is itself
at issue in several of the antitrust actions wherein plain-
tiffs are asserting that Data General's litigative strategy
is an element of a general scheme of illegal anticompetitive
activity. The validity of Data General's trade secret claims C
may therefore be litigated in the antitrust actions and
the trade secrets actions, and transfer under Section 1407

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® will help to avoid the duplicative discovery, inconsistent
pretrial rulings, and waste of judicial effort which otherwise
might occur. Of course, the degree of coordination between
the antitrust actions and the trade secrets action is left
to the discretion of the transferee judge. And any discovery
unique to a particular action can be scheduled by the trans-
feree judge to proceed concurrently with the common discovery,
thereby permitting the litigation to proceed expeditiously
in all areas. See In re Swine Flu Immunization Products
Liability Litigation, 446 F. Supp. 244, 247 (J.P.M.L. 1978).
Moreover, while voluntary cooperation among parties
and counsel is always commendable, the record before us
C demonstrates that such cooperation can best be achieved
~ by placing the actions in this docket under the supervision
of a single judge.
Data General urges that the District of Massachusetts
be selected as the transferee forum for this litigation
because relevant documents and witnesses, pertaining to
discovery of both technical and business matters at issue
in these actions, will be found at Data General's headquarters
and research facilities located in that district.
On balance, we find that the Northern District of
California is the preferable transferee forum. Three of
the six actions in this docket are already pending there,
C whereas none is pending in the District of Massachusetts.More importantly, the Honorable William H. Orrick, Jr., to.
whom those three actions are presently assigned, has had

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-10- C
an opportunity to become familiar with the legal and technical
questions in this litigation, and is therefore in the best
position to supervise the pretrial proceedings in this
litigation to their just and expeditious termination. See
In re Griseofulvin Antitrust Litigation, 395 F. Supp. 1402,
1403 (J.P.M.L. 1975). We note also that the Northern District
of California is the choice of five of the six parties to
this litigation. See In re Sugar Industry Antitrust
Litigation, 395 F. Supp. 1271, 1274 (J.P.M.L. 1975).
IT IS THEREFORE ORDERED that, pursuant to 28 U.S.C.
§1407, all actions listed on the following Schedule A and
pending in districts other than the Northern District of
California be, and the same hereby are, transferred to that ®
district and, with the consent of that court, assigned to
the Honorable William H. Orrick, Jr., for coordinated or
consolidated pretrial proceedings with the actions listed
on Schedule A and pending there.
®

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SCHEDULE A MDL-369
CENTRAL DISTRICT OF CALIFORNIA
Bytronix Corp. v. Data General Corp. Civil Action
No. 78=-3832~RF	(Px)
NORTHERN DISTRICT OF CALIFORNIA
Digidyne Corp. v. Data General Corp. Civil Action
No, C-78-1261-WHO
SCI Systems, Inc. v. Data General Corp. Civil Action
No. C=78=-2417-WHO
Fairchild Camera and Instrument Corp. Civil Action
v. Data General Corp. No. C-78-2418-WHO
DISTRICT OF NEW JERSEY
C Data General Corp. v. Ampex Corp. Civil ActionNo. 77-0636
Data General Corp. v. Ampex Corp. Civil Action r
No. 79-1247

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. mn 4 PANEL ON . : .
JURIBIAL FA c an oo Lo
ULTRA TRICT LT CATIEN | i: ETBEFORE THE JUDICIAL PANEL Mt FIED | eeoN ~T-
MULTIDISTRICT LITIGATION ROY -9 1978 : 14/79) gIN RE DATA GENERAL CORPORATION ANTITRUST) paTRGIAQ HINAT] RS
LITIGATION ) CLERA ST TRS TANCE : :
)
Data General Corporation v. Ampex )
Corporation, N.D. Calif., C.A. No. )
C79-1002~-WHO (D. N.J., C.A. No. )
77-0036) )
Data General Corporation v. Data ) DOCKET NO. 369 oo BESTE
National Corporation, D. Mass., C.A. ) . SRT SE
No. 78-2869-K ) Soo Co
Data General Corporation v. Ampex ) :
Corporation, et al., D. Mass., C.A. ) Co ’
No. 79-193-T )
Data General Corporation v. Ampex )
Corporation, et al., C.D. Calif., )
C.A. No. CV79-1342-MRP )
J OPINION AND ORDER
BEFORE MURRAY I. GURFEIN, CHAIRMAN, AND ANDREW A. CAFFREY,* : SU
ROY W. HARPER, CHARLES R. WEINER, EDWARD S. NORTHROP, AND
ROBERT H. SCHNACKE, JUDGES OF THE PANEL. bo .
PER CURIAM
I. BACKGROUND oo
A. Prior Proceedings in This Docket :
In May, 1979, the Panel, pursuant to 28 U.S.C. §1407,
centralized six actions in this docket in the Northern District
of California for coordinated or consolidated pretrial pro- CL
ceedings before the Honorable William H. Orrick, Jr. In
re Data General Corporation Antitrust Litigation, 470 F.
Supp. 855 (J.P.M.L. 1979). :
Two of these six actions in the transferee district
BN brought by Data General Corporation (Data General) against hEIps Judge Caffrey took no part in the decision of this
Imatter.|
|
I
FPI—MAR—3.27.79-64-173!

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1 Ampex Corporation (Ampex). In one of these actions, Data - oo oo
2 General is seeking a declaratory judgment against Ampex.’ oo Co
3 Data General states in its complaint that it manufactures oo
4 minicomputers and microcomputers that are smaller and less
5 expensive forms of general purpose digital computers. Data
General markets a line of these small computers under the EE
6 BREE
trademark "NOVA", along with related peripheral devices and i Cee
7 a
related system software.L’/ Data General further states that oo
8 for a NOVA to function as a general purpose digital computer,
S it must consist of a central processing unit (CPU), main
0 memory (or primary storage) ,2/ power supply, chassis and oper- oo
1 ating system software. Data General asserts that the CPU,
) main memory and operating system software constitute a single o
product which is commonly referred to as a computer.
3
Data General seeks a determination in this first action
4 SE
whether: 1) Data General's sale of NOVA minicomputers consisting
3 of a CPU and a minimum amount of main memory constitutes
6 an unlawful tying arrangement in violation of the federal
7 antitrust laws; 2) Data General's licensing practices with
8 respect to NOVA software, including Data General's policy oo a
9 of imposing little or no charge for its software license
when a certain minimum amount of Data General computer equipment
0
L
1/ Data General states in its complaint that its software
5 is specially designed as a fundamental set of instructions
basic to the operation of Data General's computer for any
3 practical application.
2/ Data General explains in its complaint that main memory
4 (which consists of one or more memory boards composed of
electromagnetic and/or electronic components mounted on a
5 printed circuit) stores the operating system, as well as |
| Ehe application programs and data actually being processediby the CPU, during the data processing cycle.
FPI=-MAR-—3-27.79-6M-1738!

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1 is purchased and Data General's policy prohibiting use of
@ the licensed software on non-Data General products, constitute
3 an illegal tying arrangement in violation of the federal
4 antitrust laws; 3) Data General's marketing and licensing
practices have created, in violation of the federal antitrust
> laws, an unreasonable restraint of trade in the sale of memory
6 boards and other computer products; and 4) Data General made
7 false and misleading statements about Ampex's financial sound-
8 ness and integrity to potential purchasers of Ampex's products.
9 The second action in the transferee district involving
10 Data General and Ampex as parties was also brought by Data
11 General. Data General alleges that Ampex has wrongfully
used Data General's memory unit trade secrets which Data
12 General had disclosed to Ampex in order to allow Ampex to
o manufacture memory units for Data General. More specifically,
14 Data General charges that Ampex unlawfully disclosed the
15 subject matter of Data General's trade secrets to a third
16 party competitor of Data General for the purpose of allowing
17 Ampex and the third party competitor to compete unfairly
18 with Data General. This action (the trade secrets action)
19 is also the first-captioned action on today's opinion and
is the action which is the subject of Data General's motion
20 for remand pursuant to 28 U.S.C. §1407. See infra at 9.
21 The remaining four actions that were subjects of the
22 Panel's May, 1979 opinion were originally filed in either
23 the Central or Northern District of California (the California
C actions), and each names Data General as a defendant.25
FPI—MAR—3.27.78.-6M.1781

Case MDL No. 369 Document	2, Filed 05/04/15 Page 15 of 28 -
1 The first of these actions was brought by Digidyne
bp) Corporation (Digidyne) against Data General, Data General's ®
3 president and various unnamed defendants. Digidyne alleges
4 that Data General maliciously and slanderously told Ampex
and other Digidyne customers that Digidyne had used trade
> secrets and proprietary information of Data General in connec-
6 tion with the design and manufacture of a Digidyne computer.
7 Digidyne subsequently amended its complaint to allege that:
8 1) Data General had illegally tied purchase of its software
9 with purchase of a CPU in violation of the federal antitrust
10 laws; and 2) Data General had attempted to monopolize the
11 business of manufacturing NOVA-compatible computers by means
of abuse of copyright laws and licensing agreements and by
12 threats of lawsuits to potential purchasers of NOVA-compatible
13 computers. ®
14 The second California action was filed by SCI Systems,
15 Inc. (SCI) against Data General. SCI claims that Data Gen-
16 eral's practice of licensing its software only for use with
17 NOVA computers, and Data General's practice of intentionally
18 designing and marketing NOVA computers and NOVA software
5 in such manner that it is technologically and financially
: impracticable for Data General's customers to design their
20 own software, constitute tying arrangements in violation
21 of the federal antitrust laws. SCI also alleges that Data
22 General has engaged in a systematic program of harassing
23 manufacturers of NOVA-compatible computers for the purpose
24 of restraining competition by bringing groundless actions ®
5 or other manufacturers, including SCI, for misappropriatingFPI~MAR—3.27.79.6M.1781

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1 trade secrets and breaching and inducing breach of Data General
@ licenses. Finally, SCI charges that Data General, in acquiring
3 the assets of another computer manufacturer, has monopolized
4 or attempted to monopolize the NOVA-compatible computer market.
The third California action was filed by Fairchild
° Camera and Instrument Corporation (Fairchild) against Data
© General. Fairchild alleges that Data General's software
7 licensing agreements constitute illegal tying arrangements
8 under the federal antitrust laws, and that Data General has
9 attempted to eliminate competition from Fairchild and other
10 manufacturers in the market for NOVA-compatible computers
11 by means of abuse of copyright laws and licensing agreements
and by litigation and threats of litigation to manufacturers
12 of NOVA-compatible computers and their potential customers.
C The fourth California action was brought by Bytronix
14 Corporation (Bytronix) against Data General. Bytronix alleges
15 that 1) Data General has restrained competition in the market
16 for minicomputer CPUs by asserting that manufacturers of
17 NOVA-compatible CPUs are violating Data General's trade
18 secrets; 2) Data General's software licensing agreements
19 constitute illegal tying arrangements under the federal anti-
trust laws; 3) Data General's marketing policies and practices
20 have unreasonably restrained trade in the sale of CPUs;
21 and 4) Data General is violating the California Business
22
23 37Subsequent to centralization of the Fairchild and SCI
actions by the Panel, Data General filed counterclaims against
Fairchild and SCI alleging misappropriation of trade secrets
® in connection with the development by Fairchild and SCI of25 CPUs that were said to be compatible with Data General's
NOVA computers.
FPI-MAR—3.27.79.6M.1781

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1 and Professions Code by greatly reducing the price of its
2 software licenses to purchasers of its other equipment and ®
3 by providing less than adequate service of equipment Data
4 General sells if that equipment is used in connection with
equipment sold by Data General's competitors.
> Subsequent to the Panel's May, 1979 opinion, a seventh
© action, brought by Data Compass Corporation (Data Compass)
7 against Data General, was transferred to the Northern District
8 of California pursuant to a conditional transfer order entered
9 by the Panel that became final on June 8, 1979. Data Compass
10 alleges that Data General engaged in illegal tying arrangements
11 and that Data General breached a computer purchase contract
between the parties.
+ Judge Orrick has adopted a bifurcated approach to the C13 actions before him in the transferee district. Discovery
14 and trial have been scheduled to occur first on the antitrust
15 tie-in issues present in the actions, to be followed by dis-
16 covery and trial of the remaining issues.
17 B. Description of Actions Outside of the Transferee
District
18 The second above-captioned action (Data National) was
19 filed in the District of Massachusetts by Data General against
20 Data National Corporation (Data National). Data General
21 in its complaint states that it sells its products to two
29 kinds of purchasers: Original Equipment Manufacturers (OEMs)
23
: oe25
FPI-MAR—3.27.79.6M.1781

-. - Case MDL No. 369 Document 2, Eiled 05/04/15 Page 18 of 28
1 and Endusers .%/ Data General also states that OEMs receive
C discounts from Data General that are ten percent greater
3 than discounts granted to Endusers. Data General alleges
4 that Data National 1) failed to pay invoices when due; 2)
forfeited discounts based on Data National's representations
5
that it was an OEM and would purchase a certain minimum quantity
6
of Data General products; 3) failed to pay previously agreed
7 upon cancellation charges imposed upon the cancellation of
8 purchase orders submitted to Data General by Data National;
9 4) failed to pay for certain field engineering services rendered
10 by Data General; 5) falsely and fraudulently represented
11 to Data General that Data National was in compliance with
Data General's OEM certifications in order to induce Data
12
General to enter into an OEM agreement with Data National;
C and 6) committed unfair trade practices by falsely representing
14 and continuing to represent to third parties that Data National
15 was a Data General OEM.
16 In Data National's counterclaim, Data National alleges
17 that Data General breached its sales contract with Data National
18 and that Data General induced Data National's customers to
breach their contracts with Data National. Data National
19
also alleges that Data General violated federal antitrust
20
21
4/ Data General explains that an OEM is an intermediate
22 purchaser who purchases Data General's equipment for resale
after incorporating the equipment into a system which includes
93 substantial hardware and/or software developed or manufacturedby the purchaser and which represents a significant enhancement
} and transformation of the equipment purchased from Data Gen-
eral, both as to value and function. An Enduser is any
purchaser other than an OEM.
5
FPI~MAR=-3.27-79-6M-1781

: Case MDL No. 369 Document 2g Filed 05/04/15 Page 19 of 28 . .
1 laws by 1) requiring, in restraint of trade, the addition
2 of substantial hardware and/or software developed or manu-
3 factured by Data National before Data National would be allowed
a to sell Data General's equipment; 2) forcing Data National
. and others to sell Data General's equipment at prices specified
by Data General; 3) engaging in price discrimination among
¥ purchasers; and 4) attempting to monopolize the sale of all
7 of Data General's equipment "which is only furnished to
8 [Data National] and others pursuant to agreements whereby
9 the buyer is forced to certify that it will enhance [Data
10 General's] equipment by the addition of other substantial
11 equipment before sale."
12 ~The third above-captioned action (Ampex I) was filed
in the District of Massachusetts by Data General against
13 Data National and Ampex. Data General alleges that Ampex
14 and Data National are infringing United States Letters Patent
15 No. 4,014,006 entitled "Data Processing System Having a Unique
16 CPU and Memory Timing Relationship and Data Path Configuration."
17 Ampex is alleged to have made and used, and to have induced
18 others to make, sell and use, data processing systems, includ-
19 ing memory devices, which embody the invention of Patent
I~ No. 4,014,006. Data General also alleges that Ampex, alone,
has 1) wrongfully misappropriated Data General's proprietary
21 information; 2) unfairly competed with Data General; 3)
22 breached Ampex's contract with Data General; 4) infringed
23 upon Data General's common law copyrights; 5) been unjustly
24 enriched at Data General's expense; and 6) engaged in derivererilly
25 | wilful tortious conduct. FPI-MAR——3.27.79.6M-1781

. E Case MDL No. 369 Document	29 Fed 05/04/15 Page 20 of 28
1 The fourth above-captioned action (Ampex II) is brought
o by Ampex and Data National against Data General and Concept
3 Development, Inc. (CDI) in the Central District of California.
4 Plaintiffs allege that Ampex entered into a contract with
CDI whereby CDI promised to design and deliver a memory unit
> that would operate compatibly with Data General's NOVA 2
6 CPU, and that CDI agreed to indemnify Ampex against all claims
7 of interest by third parties in or to the designs furnished
8 by CDI to Ampex. Plaintiffs further allege that Ampex sold
9 one memory unit to Data National incorporating the CDI designs,
10 which is currently the subject of litigation in Ampex I.
11 Plaintiffs seek a declaration that Letters Patent No. 4,014,006
is void or not infringed by them and a further declaration
12 that Ampex has not engaged in the illegal conduct alleged
C by Data General in Ampex I. Plaintiffs also seek indemnifi-
14 cation from CDI for any wrongful conduct that plaintiffs
15 may be adjudged to have committed.
16 II. PROCEEDINGS BEFORE THE PANEL
17 Because Data National, Ampex I and Ampex II appeared
18 to involve common questions of fact with the actions in this
docket previously transferred to the Northern District of
+o California, the Panel, pursuant to 28 U.S.C. §1407 and Rule
20 9, R.P.J.P.M.L., 78 F.R.D. 561, 567-68 (1978), entered an
21 order conditionally transferring the three actions to the
22 Northern District of California for inclusion in the coordinated
. 23 or consolidated pretrial proceedings occurring there. Data
~ National and Ampex support transfer. Data General opposes
® transfer.
| FPI-MAR—3.27.79.6M.1781

: Case MDL No. 369 Document 2, Filed 05/04/15 Page 21 of 28 : .
1 Data General moves the Panel, pursuant to 28 U.S.C.
2 §1407, for an order remanding the trade secrets action to
3 its transferor district. Ampex opposes remand at this time.
4 ITI. HOLDING
| We find that Data National, Ampex I and Ampex II share
> questions of fact with the previously transferred actions
© and that transfer of the three actions to the Northern District
7 of California pursuant to Section 1407 will best serve the
8 convenience of the parties and witnesses and promote the
9 just and efficient conduct of the litigation. We further
10 find that remand of the trade secrets action is not appropriate
11 at this time.
IV. REASONING
12
A. Ampex I, Ampex II, and the Trade Secrets Action
13 Although Data General concedes that these three actions
14 share questions of fact regarding computer technology with
15 all actions in the transferee district, Data General contends
16 that, as a result of Judge Orrick's rulings that the antitrust
17 tie-in claims in the actions in the transferee district will
18 proceed through discovery and trial independent of trade
19 secret and other claims, the benefits, if any, of transfer
of Ampex I and Ampex II to the transferee district and retention
20 of the trade secrets action there would be minimal and the
21 resulting delay and prejudice to Data General would be great.
22 Data General asserts that Ampex's support for transfer of
23 Ampex I and Ampex II and Ampex's opposition to remand of
24 the trade secrets action evidences Ampex's intention to engage ®55 in forum shopping and to bring all proceedings involving
FPI—MAR=——3.27.79.61-1781

: © Case MDL No. 369 Document 21 Filed 05/04/15 Page 22 of 28
1 claims of Data General to a standstill.
o Data General further urges that Ampex I and Ampex II,
3 involving a specific patent, specific conduct of Ampex and
4 CDI, and specific memory devices not manufactured by Data
5 General, will have little in common with the discovery presently
being conducted in the transferee district that has gone
6 .
into entire markets, entire computer systems and entire product
7 .
lines, and that has focused completely on antitrust, rather
8 than patent, issues. Data General also contends that the
9 remaining discovery in the trade secrets action is likewise
10 substantially unrelated to the antitrust discovery occurring
11 in the transferee district.
1s We find these arguments unpersuasive. Data General,
itself, has in pleadings before the transferee court delin-
C eated the following relationships between the trade secret14 ,
laims and the antitrust tie-in claims pending there:
15 The trade secret issues here involve theft of complex
designs and intellectual property in a highly sophisti-
16 cated industry where physical dissimilarities between
the original and copied product make it difficult to
17 prove or disprove a theft case simply by looking at
the two items. Among other things, proof of trade
18 secret claims here will involve the technology of the
hardware-software interface, the time taken to develop
9 : a particular product, the extent to which "glitches"1 or failures in the original and copied hardware arise
under similar operational circumstances, and so forth.
20 As explained below, these technology issues also arise
in the tie-in case. We submit that the court's analysis
21 of the relationship between the tie issues and the
trade secret issues will be helped by considering the
29 problem as one of the relationship between the tie
issues and technology issues.
23 Memorandum of Data General Corporation In Opposition to Plain-
= lecees. Motion for Entry of a Pretrial Order Limiting the|
‘November Trial and Staying Discovery at 3. (emphasis in
FPI—MAR—3.27-.79-6M.1781

Case MDL No. 369 Document 2 _ Filed 05/04/15 Page 23 of 28 : Ce
1 original). We stress that Data General was discussing not
2 only its claims against Ampex in the trade secrets action, @®
3 but also Data General's counterclaims alleging misappropriation
4 of trade secrets against plaintiffs in two other actions
5 in the transferee district.
6 At oral argument before the Panel, Ampex went to great
lengths to cogently demonstrate to the Panel that the same
7 complex computer technology involved in the actions now in
8 the transferee district also provides the underpinning for
9 Ampex I and Ampex II, regardless of the fact that these two
10 actions involve legal theories not yet present in the trans-
11 feree district. In particular, Ampex has persuaded us that
12 the actions in the transferee district and Ampex I and Ampex
13 IT all involve intertwined factual questions relating to Cprior art and development of the same computer technology
14 and how that technology pertains to Data General's marketing
15 practices.
16 Thus, transfer of Ampex I and Ampex II and retention
17 of the trade secrets action in the transferee district will
18 contribute to the expeditious resolution of the related anti-
19 trust and proprietary right claims involving Data General's
20 minicomputer products by placing the entire controversy before
a single judge conversant with the complex computer technology
24 underlying the claims in all actions and by fostering orderly
22 pretrial proceedings on those common issues.
23 The adoption of a bifurcated pretrial schedule by Judge
24 Orrick does nothing to render the continued centralization ®
FPI~MAR—3.27.79.6M.1781

. ; Case MDL No. 369 Document	23 Fed 05/04/15 Page 24 of 28
1 of all actions before Judge Orrick inappropriate.>’ As we
® noted in our original opinion in this litigation, and have
3 repeatedly emphasized throughout the Panel's history, Section
4 1407 contemplates that the degree and manner of coordinated
or consolidated pretrial proceedings is left entirely to :
° the discretion of the trial judge. See, e.g., In re Data
© General Corporation Antitrust Litigation, supra, 470 F. Supp.
7 at 859; In re Equity Funding Corporation of America Securities
8 Litigation, 375 F. Supp. 1378, 1384 (J.P.M.L. 1974). The
9 transferee judge, as the firsthand judicial observer, is
10 obviously in the best position to determine the desirability
11 of a bifurcated method of pretrial proceedings. We note
. that, as Data General admits, the bifurcated proceedings
: in the transferee district will not result in a halt to all
C relevant proceedings with respect to trade secret claims,
14 for technological discovery that is undertaken on the antitrust
15 tie-in claims and that is also related to the trade secret
16 claims will, perforce, be occurring concurrently. This rea-
17 soning similarly applies to Ampex I and Ampex II.
18 Furthermore, we note that Data General has already
19 requested Judge Orrick to recommend to the Panel remand of
the trade secrets action, and Judge Orrick, in a ruling from
20 the bench on July 18, 1979, has denied that request. The
21 following quotation from an earlier Panel opinion is apposite
22
23 5/ For adiscussion on the use of separate trials of sep-
arate issues as a means of securing a more orderly presentation
4 of evidence or a better understanding of the evidence in
relation to the particular issue or issues under consideration
¢ by the trier of fact, see Manual for Complex Litigation,Part I, §4.12 (rev. ed. 1977).
FPI—MAR—3.27.73-6M.1781

: Case MDL No. 369 Document 2 Filed 05/04/15 Page 25 of 28 : .
- 14 =
1 to the proceedings before us:
2 In considering the question of remand, the Panel has
consistently given great weight to the transferee judge's
3 determination that remand of a particular action at
a particular time is appropriate because the transferee
: 4 judge, after all, supervises the day-to-day pretrial
: proceedings. See, e.g., In re IBM Peripheral EDP Devices
5 Antitrust Litigation, 407 F. Supp. 254, 256 (J.P.M.L.
1976). The transferee judge's notice of suggestion
of remand to the Panel is obviously an indication that
6 he perceives his role under Section 1407 to have ended.
In re Air Crash Disaster Near Dayton, Ohio, on March 9, .
7 1967, 386 F. Supp. 908, 909 (J.P.M.L. 1975). Absent
a notice of suggestion of remand from the transferee
8 judge to the Panel, any party advocating remand before
the Panel bears a strong burden of persuasion. We
rule that movants have not met this burden here and
9 that the motion for remand is premature. [The transferee
judge] has become thoroughly familiar with the issues
10 in this entire litigation and is in the best position
to determine the future course of [each action in this
11 docket].
12 Plaintiffs' apparent dissatisfaction with some
of [the transferee judge's] pretrial rulings is clearly
not a factor to be taken into consideration by the
13 Panel in exercising its discretion under Section 1407.
The Panel has neither the statutory authority nor the
14 inclination to review decisions of district courts,
whether they are transferor or transferee courts.
15 See In re Molinaro/Catanzaro Patent Litigation, 402
F. Supp. 1404, 1406 (J.P.M.L. 1975); In re Glenn W.
16 Turner Enterprises Litigation, 368 F. Supp. 805, 806(J.P.M.L. 1973).
17 In re Holiday Magic Securities and Antitrust Litigation,
18 433 F. Supp. 1125, 1126 (J.P.M.L. 1977). We emphasize that
19 if and when any action or claim in this docket is, in fact,
20 ready for trial or otherwise ready for remand because the
transferee judge finds that Section 1407 proceedings pertaining
21
: to that action or claim are completed, the transferee judge
22
may suggest to the Panel that the Panel remand the action
23 or claim to its transferor court. 28 U.S.C. §1407(a); Rule
24 11(c¢) (ii), R.P.J.P.M.L., 78 F.R.D. 561, 569 (1978). See, ®25 e.g., In re A. H. Robins Co., Inc. "Dalkon Shield" IUD Products
FP[-MAR—3.27.78-6M.1781

~ Case MDL No. 369 Document	3 5 Filed 05/04/15 Page 26 of 28
1 liiapizity Litigation, 453 F. Supp. 108 (J.P.M.L. 1978).
o B. Data National
3 Data General asserts that Data National primarily in-
4 volves claims for breach of contract and does not share suffi-
cient questions of fact with the actions in the transferee T
° district to warrant transfer. Furthermore, Data General -
© contends, the antitrust claims in Data National are unrelated ;
7 to the antitrust claims in the transferee district because
8 in none of the actions in the transferee district is a non-Data
9 General party a purchaser of Data General products under
10 an OEM contract. Data General urges that the actions in
11 the transferee district involve allegedly anti-competitive
practices in sales to ultimate users of computer equipment,
N whereas Data National involves alleged restraints and price
C discrimination in Data General's distribution system to OEMs.
14 Accordingly, Data General stresses that while the claims
15 in Data National and the actions in the transferee district
16 may be based on violations of the antitrust laws, the factual
17 issues are dissimilar and would not benefit from Section
18 1407 proceedings. Data General also contends that transfer
19 of Data National should be denied because a proper interpre-
tation of Massachusetts contract law is essential to resolution
20 of the antitrust claims in Data National, and this can best
21 be accomplished by a Massachusetts federal judge familiar
22 with Massachusetts law. Finally, Data General notes that
23 a motion to dismiss Data General's fraud claims in Data National
ul is pending in the Massachusetts court, and Data General there-
@ fore suggests that transfer of Data National would be
inappropriate prior to resolution of that motion.
FPI~MAR——3.27.79.6M.1781

: : Case MDL No. 369 Document a Filed 05/04/15 Page 27 of 28 .
1 We find that Data National should also be included
2 in the centralized proceedings before Judge Orrick. We are
: 3 persuaded that in both the actions in the transferee district
: 4 and in Data National substantial overlapping discovery will
5 be required regarding Data General's marketing practices,
6 Data General's economic power, computer technology, and the
computer market in general. This commonality is underscored
7
by Data National's assertion that Data General's illegal
8
practices in the OEM market have enabled Data General to
E exercise 1ts monopoly power in the Enduser market. Transfer
10 of Data National is therefore necessary in order to avoid
11 duplicative discovery and prevent waste of resources by the
12 parties, their counsel and the courts.
13 We see no reason to delay transfer because of the pend-
ency of a motion to dismiss in Data National. This motion
14
can be presented to and decided by the transferee judge fol-
15
lowing transfer. See In re Commonwealth 0il/Tesoro Petroleum
16 Securities Litigation, 458 F. Supp. 225, 230 (J.P.M.L. 1978).
17 The fact that the transferee court may have occasion to apply
18 Massachusetts law also serves as no impediment to transfer
19 of Data National. As we stated in In re Air Crash Disaster
20 at John F. Kennedy International Airport on June 24, 1975,
407 F. Supp. 244 (J.P.M.L. 1976):
21
[I]t is within the very nature of coordinated
22 or consolidated pretrial proceedings in multidistrict
litigation for the transferee judge to be called upon
23 to apply the law of more than one state. See, e.g.,
In re Air Crash Disaster at Boston, Massachusetts,
on July 31, 1973, 399 F. Supp. 1106 (D.Mass. 1975).
24 Thus, [all parties] can be assured that [the law of
the transferor district], as well as any other state's
25 law, if appropriate, will be duly applied by the trans-
feree judge.
FPI~MAR—-3.27.78-6M.1781

> K Case MDL No. 369 Document 3 7Filed 05/04/15 Page 28 of 28
1 Id. at 246-47.
® IT IS THEREFORE ORDERED that, pursuant to 28 U.S.C.
3 §1407, the actions entitled Data General Corporation v. Data
4 National Corporation, D. Massachusetts, C.A. No. 78-2869-K, .
Data General Corporation v. Ampex Corporation, et al., D. i
7 Massachusetts, C.A. No. 79-193-T, and Ampex Corporation, -
© et al. v. Data General Corporation, et al., C.D. California,
7 C.A. No. CV79-1342-MRP, be, and the same hereby are, trans-
8 ferred to the Northern District of California and, with the
9 consent of that court, assigned to the Honorable William
10 H. Orrick, Jr., for inclusion in the coordinated or consolidated
11 pretrial proceedings occurring there.
IT IS FURTHER ORDERED that the motion pursuant to 28
+2 U.S.C. §1407(a) for remand of the action entitled Data General
@ Corporation v. Ampex Corporation, .N.D. California, C.A. No.
14 C79-1002-WHO (D. New Jersey, C.A. No. 77-0036), be, and the
15 same hereby is, DENIED.
16
17
18 =
19 . ;
20 -
21 ;
22
23
¢
FPI—MAR——3.27.79-6M.1781