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Zest Ip Holdings, LLC, et al v. Implant Direct Mfg.

November 14, 2011


The opinion of the court was delivered by: Hon. William V. Gallo U.S. Magistrate Judge


On October 12, 2011, the Court conducted a Discovery Conference in this case. At the Discovery Conference, the Court discussed with counsel the potential production of Defendants' patent applications, as sought by Plaintiffs. At the conference, the Court ordered Defendants to produce to the Court, for in camera review, the patent applications at issue. On October 17, 2011, Plaintiffs' counsel submitted briefing on the issues presented. On October 20, 2011, Defendants' counsel submitted briefing on the issues presented, as well as the patent applications. The Court received from Defendants two patent applications. The Court has reviewed in camera, the patent applications.

After careful review of Defendants' in camera submission, the pleadings, the parties' letter briefs, and relevant case law and statutory authority, it is plainly obvious to the Court that Defendants' two patent applications*fn1 fall squarely within the ambit of Federal Rule of Civil Procedure 26. Defendants' two patent applications are relevant to the parties' claims and defenses and/or are likely to lead to admissible evidence in this action.

Defendants object to the disclosure on several grounds: (1) relevance; (2) confidentiality; (3) fear that opposing counsel will not honor the Protective Order filed in this case; (4) the attorney-client privilege; and (5) judicial privilege. The Court has considered these objections and finds as follows:

1. Relevance

The relevance of the patent applications is obvious to the Court as both applications make extensive reference to Plaintiffs' patents, (the '219 and '447 patents), which are the subject of this action. The Court does not share Defendants' restrictive view of relevance that the only comparison that need be made is between Plaintiffs' patent claims and Defendants' allegedly infringing products. "Many courts have concluded that such applications are relevant because they 'may contain information or admissions that clarify, define or interpret the claims of the patent in suit.'" Caliper Technologies Corp. v Molecular Devises Corp., 213 F.R.D. 555, 561 (N.D. Cal. 2003) citing Tristrata Technology, Inc. v. Neoteric Cosmetics, Inc., 35 F. Supp 2d 370, 372 (D. Del. 1998). This Court concludes the same. Relevant evidence regarding willful infringement, prior art, and equivalency may be present within Defendants' two patent applications.

2. Confidentiality

The Court recognizes that Plaintiffs and Defendants are "fierce competitors" as Defendants contend. However, this intense rivalry does not trump Plaintiffs' right and access to relevant information they need to prosecute their case. The Court has approved a two-tier Protective Order (Doc. No. 30) proposed by the parties in this action. The Protective Order provides guidelines for the classification of information to protect the information's confidentiality. The Protective Order, at paragraph 4, allows the party producing a document to designate the document as "Confidential" and "Confidential - For Counsel Only." Moreover, the Protective Order, at paragraph 22, allows a party to object to the disclosure of information on any ground "other than the mere presence of Confidential Information." Clearly, the parties, and especially Defendants, in a case involving highly sensitive information regarding products which are the life-blood of their respective businesses, contemplated the necessity of having to release such information to each other and took positive steps to propose such a Protective Order. Defendants' unease with the protection provided by the Protective Order, which was jointly submitted to the Court, lacks justification.

3. Fear That Opposing Counsel May Not Honor

The Protective Order

This objection is closely related to the previous objection. The basis for Defendants' fear is that Plaintiffs' counsel is a member of the same law firm that prosecutes Plaintiffs' patent applications. Defendants contend that disclosure to Plaintiffs' counsel of the two patent applications at issue may result in intentional or even inadvertent disclosure to Plaintiffs' patent prosecutors. Defendants further assert that if that were to occur, it would cause irreparable harm to their business interests. Although Plaintiffs' counsel has orally assured Defendants that no such disclosure would occur, Defendants nonetheless demand Plaintiffs' counsel execute a written document that states that the patent prosecutors in her law firm will be insulated from any disclosure made to her. The Court is uncertain what additional protection is afforded Defendants by such a writing that is not afforded to it already by counsel's oral assurances, made in the Court's presence, that no such disclosure will occur. Counsel's word is her bond and this is sufficient for the Court. Moreover, the Court assumes, until shown otherwise, that all attorneys practicing before it conduct themselves ethically and in accordance with all agreements and orders such as the Protective Order entered in this case. Defendant has not produced any evidence to the Court which would call into question Plaintiffs' counsel integrity. Additionally, Plaintiffs' counsel is undoubtedly aware of the serious consequences for any unauthorized disclosure of confidential information.

4. The Attorney-Client Privilege

Defendants have not cited any authority to support their position that their patent applications, even though submitted to the U.S. Patent and Trademark Office pursuant to 35 U.S.C. §122(a), (b)(2)(B)(2)(A)(i), fall within the scope of the attorney-client privilege. Defendants argue that they submitted the patent applications pursuant to § 122 "in absolute secrecy" and to seek the U.S. Patent and Trademark Office's "legal advice" on the patentability of its products. However, there is ample case authority, which will be addressed in the next section of this Order, ...

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