United States District Court, S.D. California
CADENCE PHARMACEUTICALS, INC. and SCR PHARMATOP, Plaintiffs,
FRESENIUS KABI USA, LLC, Defendant.
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SANCTIONS ECF NO. 218
MITCHELL D. DEMBIN, Magistrate Judge.
Before the Court is Defendant's Motion for Sanctions filed on May 20, 2014. (ECF No. 218). Defendant seeks relief based upon Plaintiff Cadence Pharmaceuticals, Inc.'s ("Cadence") violation of the Protective Order entered by this Court on June 10, 2013. (ECF No. 61). Cadence responded in opposition on June 3, 2014. (ECF No. 247). A public, redacted version of the opposition was filed on June 13, 2014. (ECF No. 263). Defendant replied on June 10, 2014. (ECF No. 259). A hearing was held on June 20, 2014. (ECF Nos. 281, 297).
A. Relevant Provisions of the Protective Order
The Protective Order was negotiated between the parties and submitted to the Court as a Joint Motion. The Court endorsed the proffered Protective Order without modification. (ECF Nos. 48, 61).
As agreed by the parties, only "counsel of record, " as defined in the Protective Order, were authorized to see information designated as "attorneys' eyes only." (ECF No. 61 ¶ 8). "Counsel of record" was defined to include litigation counsel and necessary staff in this case and "two designated in-house legal counsel for each Party of Record who have responsibility for maintaining, defending or evaluating this litigation but who do not have involvement in initiating or prosecuting patent applications or reexamination proceedings relating to injectable formulations of acetaminophen...." ( Id. ¶ 3). Lists of approved personnel were required to be exchanged along with appropriate certifications. ( Id. ). Each party was required to take reasonable precautions to prevent unauthorized or inadvertent disclosure. ( Id. ¶ 15). The Order also included a "prosecution bar" preventing any individual receiving access to "confidential" or "attorneys' eyes only" information from participating or having any involvement in patent office proceedings relating to injectable formulations of acetaminophen for two years after termination of this lawsuit. ( Id. ¶ 19).
A party objecting to a confidential designation was required to notify opposing counsel in writing and, absent resolution, bring the matter before the Court within seven days. ( Id. ¶ 14). The parties also agreed that the restrictions and obligations of the Protective Order would not apply to any confidential information that is public knowledge or has become public knowledge other than as a result of disclosure by the receiving party. ( Id. ¶ 29).
B. Cadence's Breach of the Protective Order
The relevant facts of Cadence's breach of the Protective Order largely are undisputed. The only real dispute, in that regard, is whether an amendment filed to one of Cadence's patents-in-suit during reexamination before the U.S. Patent and Trademark Office ("PTO") was influenced by information learned as a result of the breach.
The facts are as follows:
1. On January 10, 2014, Defendant served upon Plaintiffs the Responsive Expert Report of Dr. Yaman and designated the entire report "attorneys' eyes only." (ECF No. 218-1 at 9). Dr. Yaman's responsive expert report opined that Defendant's product and manufacturing process do not infringe Plaintiff's patent designated as 218. ( Id. )
2. On February 6, 2014, litigation attorney Darryl Steensma and paralegal Kristen Fechner of the law firm Latham & Watkins, counsel of record for Plaintiff Cadence, electronically provided the restricted Yaman report to Hazel Aker, the general counsel of Cadence. (ECF No. 218-3, Exh. I). The report was included, along with non-confidential information, to Ms. Aker as part of a periodic update from litigation counsel. ( Id. ) Ms. Aker was not authorized, pursuant to the Protective Order, to receive information designated attorneys' eyes only. ( Id. )
3. That same day, Ms. Aker electronically provided the materials that she had received, including the restricted Yaman report, to two law firms representing Cadence before the PTO - Wilson Sonsini Goodrich and Rosati ("Wilson") and Hunton & Williams LLP ("Hunton"). The provided documents were downloaded by three attorneys at the Wilson firm, Jeff Vockrodt, Matt Grumbling and Jeff Guise. ( Id. ) Due to a technical problem, Ms. Aker made the documents electronically ...