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Protective Orders in View of Reexamination

In 55 Brake, L.L.C. v. Audi of America, Inc. et. al., (case 1-08-cv-00177, IDD), plaintiff 55 Brake is a patent owner asserting patent infringement of its ‘587 patent by several large automobile manufacturers.  The parties entered a protective order to control the discovery of confidential information.  It bars litigation counsel in the case from participating in any reexamination proceedings of the ‘587 patent:

Unless otherwise directed by the Court or authorized in writing by the Producing Party, no person involved in Patent Prosecution (defined below) on behalf of Plaintiff 55 Brake, L.L.C., including without limitation the inventors of any pending patent application described herein, shall have access to CONFIDENTIAL or HIGHLY CONFIDENTIAL Discovery Material of a Producing Party . . . For purposes of this Protective Order, Patent Prosecution shall be defined as preparing, drafting, reviewing, filing, responding to office actions, signing oaths or declarations, or prosecuting patent applications or patents, or assisting in any of those activities, with respect to . . . (c) any . . .re-examinations of any of the patents asserted in the current litigation . . . .

One of the defendants filed a reexamination of the ‘587 over two years later.  55 Brake then motioned the Court to amend the protective order to allow its litigation counsel to assist its reexamination counsel in the defense of the ‘587 patent.  55 Brake offered that its litigation counsel would only assist in prior art issues since its litigation team had much more knowledge about the prior art issues than the reexamination team.  But the Court was not persuaded.

Judge B. Lynn Winmill denied the motion, because “good cause” showing “actual prejudice” to 55 Brake if the order was not amended was not shown.  CytoSport, Inc. v. Vital Pharmaceuticals, Inc., 2010 WL 1904840 (E.D.Cal. May 10, 2010) (citing Brown Bag Software v. Symantec Corp., 960 F.2d 1465, 1470 (9th Cir.1992)).  And when considering such “good cause” the court must balance “the risk of inadvertent disclosure of trade secrets . . . , against the risk . . . that protection of . . . trade secrets impaired prosecution [of 55 Brake’s] claims.” Intel Corp. v. VIA Techs., Inc., 198 F.R.D. 525, 528 (N.D.Cal.2000).

55 Brake’s claim  that its legal representation would be more efficient if its litigation team was allowed to assist its reexamination team was not sufficient to show “actual prejudice.”  The Court found that, in general, inefficiency in legal representation does not amount to “actual prejudice.”

55 Brake argued that the original intent of the ban was to avoid having confidential information obtained in discovery used to amend claims, and it even offered that it would not amend claims in the reexamination, but only defend those in the issued patent.  Judge B. Linn Winmill responded:

There are three flaws in this argument. First, although Volkswagen filed the reexamination proceedings long after this lawsuit was filed, the parties obviously anticipated a reexamination because they expressly addressed it in the Protective Order. Second, the ban is broad and cannot be read to protect only against the use of confidential information to amend claims. Third, it would have been easy for the drafters to narrow the ban to only apply to the amendment of claims, but the broad language was included instead. Under these circumstances, the Court would have to rewrite the Protective Order to rule for 55 Brake. That would be justified if 55 Brake could show that without an amendment, its pursuit of this case would be prejudiced. But no such showing has been made, and in its absence, the risk of inadvertent disclosure is too great to warrant the amendment 55 Brake requests. In re Deutsche Bank Trust Co., 605 F.3d 1373, 1378-80 (Fed. Cir. 2010)(discussing the risk of inadvertent disclosure when patent litigation counsel become involved in patent prosecution).

The Court’s conclusion is not based on a lack of confidence in 55 Brake’s litigation counsel. The Court is sure that counsel will not intentionally pass along any prohibited material to the prosecution team. But it is very difficult to parse out the confidential from the non-confidential and avoid even an inadvertent disclosure. Id. at 1378 (noting that that “[i]t is very difficult for the human mind to compartmentalize and selectively suppress information once learned, no matter how well-intentioned the effort may be to do so”) (internal citation omitted). Because of this, it is critical to draft a protective order to deal in detail with the use of confidential information in other proceedings. That was not done here, at least to the extent now desired by 55 Brake.

For all of these reasons, the Court will deny the motion.

So 55 Brake was not successful in its motion to amend the protective order.  One lesson learned here is that when negotiating protective orders, the litigation team for the patent holder has to consider all possibilities regarding reexamination, even if one is not necessarily imminent.  It is harder to amend protective orders later in the litigation than to negotiate terms up front.

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Timothy Bianchi
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