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Karl Storz Endoscopy-America, Inc. v. Stryker Corporation

United States District Court, N.D. California

November 21, 2014

KARL STORZ ENDOSCOPY-AMERICA, INC., Plaintiff,
v.
STRYKER CORPORATION, et al., Defendants.

ORDER RE: PROTECTIVE ORDER DISPUTE RE: DKT. NO. 94

JACQUELINE SCOTT CORLEY, Magistrate Judge.

In this patent infringement lawsuit the parties dispute the protections to be given to confidential information belonging to Defendants Stryker Corporation and Stryker Communications, Inc. (together, "Stryker"). Now pending before the Court is the motion of Plaintiff Karl Storz Endoscopy-America ("KSEA") for a protective order. (Dkt. No. 94.) KSEA seeks entry of a protective order that does not include a patent prosecution bar ( id. at 2; see Dkt. No. 95), while Stryker urges the Court to impose a protective order that does include such a provision. ( See Dkt. No. 98.) After carefully considering the parties' arguments, and having had the benefit of oral argument on November 20, 2014, the Court rules as set forth below.

BACKGROUND

On February 26, 2014, KSEA filed a complaint against Stryker for patent infringement.[1] (Dkt. No. 1; Dkt. No. 67.) The parties, both producers and sellers of medical imaging devices and operating room communication technology ( see Dkt. No. 67; Dkt. No. 94 at 3), have been engaged in discovery since June of 2014. (Dkt. No. 59.) Part of this discovery pertains to information regarding the structure and operation of Stryker's allegedly infringing products. ( See Dkt. No. 94 at 3.) The parties have reached an agreement as to all terms of a protective order except for one: whether or not the order should include a patent prosecution bar.

LEGAL STANDARD

Federal Rule of Civil Procedure 26(c) "confers broad discretion on the trial court to decide when a protective order is appropriate and what degree of protection is required." Seattle Times Co. v. Rhinehart, 467 U.S. 20, 36 (1984). Generally, the party seeking a protective order has the burden of showing that the protection is warranted. See Foltz v. State Farm Mut. Auto. Ins. Co., 331 F.3d 1122, 1130 (9th Cir. 2003).

Federal Circuit law governs the determination of whether a protective order should include a patent prosecution bar. See In re Deutsche Bank Trust Co. Ams., 605 F.3d 1373, 1378 (Fed. Cir. 2010). The party seeking the prosecution bar must demonstrate good cause for its inclusion, which involves two showings. First, the party must show that there is an unacceptable risk of disclosure of confidential information. Such risk may exist when litigation counsel is also involved in "competitive decisionmaking" for a client. Id. at 1381. The Federal Circuit has identified several situations that may qualify as "competitive decisionmaking, " including "obtaining disclosure materials for new inventions and inventions under development, investigating prior art relating to those inventions, making strategic decisions on the type and scope of patent protection that might be available or worth pursuing for such inventions, writing, reviewing, or approving new applications or continuations-in-part of applications to cover those inventions, or strategically amending or surrendering claim scope during prosecution[.]" Id. However, not all involvement in patent prosecution qualifies as "competitive decisionmaking" under the Deutsche Bank standard. The Federal Circuit has distinguished administrative and oversight duties from activities in which counsel plays a "significant role in crafting the content of patent applications[, ]" id. at 1379-80, which poses a greater risk of inadvertent disclosure. Because of the fact-specific nature of this inquiry, a "case-by-case"- i.e., counsel-by-counsel- determination of competitive decisionmaking is necessary. See U.S. Steel Corp. v. United States, 730 F.2d 1465, 1467 (Fed. Cir. 1984).

Second, once a party has established a risk of inadvertent disclosure, it must demonstrate that the proposed prosecution bar is reasonable in scope. Deutsche Bank, 605 F.3d at 1381. With respect to this second prong, "a party seeking imposition of a patent prosecution bar must show that the information designated to trigger the bar, the scope of activities prohibited by the bar, the duration of the bar, and the subject matter covered by the bar reasonably reflect the risk presented by the disclosure of proprietary competitive information." Id. If the moving party makes this showing, the court must weigh the risk of inadvertent disclosure against the potential injury to the party deprived of its counsel of choice. Id.

This District has approved a Model Protective Order ("Model PO") that governs discovery unless the court enters a different protective order. See U.S. District Court for the Northern District of California's Stipulated Protective Orders webpage, at http://cand.uscourts.gov/stipprotectorder ("The protective orders on this page are court-approved model forms to which counsel may stipulate in a particular case."); N.D. Cal. Patent L.R. 2-2 ("The Protective Order authorized by the Northern District of California shall govern discovery unless the Court enters a different protective order."). The Model PO provides that:

Absent written consent from the Producing Party, any individual who receives access to "HIGHLY CONFIDENTIAL - ATTORNEYS' EYES ONLY" or "HIGHLY CONFIDENTIAL - SOURCE CODE" information shall not be involved in the prosecution of patents or patent applications relating to the subject matter of this action, including without limitation the patents asserted in this action and any patent or application claiming priority to or otherwise related to the patents asserted in this action, before any foreign or domestic agency, including the United States Patent and Trademark Office ("the Patent Office"). For purposes of this paragraph, "prosecution" includes directly or indirectly drafting, amending, advising, or otherwise affecting the scope or maintenance of patent claims. To avoid any doubt, "prosecution" as used in this paragraph does not include representing a party challenging a patent before a domestic or foreign agency (including, but not limited to, a reissue protest, ex parte reexamination or inter partes reexamination). This Prosecution Bar shall begin when access to "HIGHLY CONFIDENTIAL - ATTORNEYS' EYES ONLY" or "HIGHLY CONFIDENTIAL - SOURCE CODE" information is first received by the affected individual and shall end two (2) years after final termination of this action.

In the ordinary course, "the court treats the model protective order as setting forth presumptively reasonable conditions regarding the treatment of highly confidential information." Kelora Sys., LLC v. Target Corp., No. 11-cv-2284, (CW) (LB), 2011 WL 6000759, at *2 (N.D. Cal. Aug. 29, 2011).

DISCUSSION

I. THE PARTIES' ARGUMENTS

KSEA contends that a patent prosecution bar is unnecessary in this case because there is no risk that any information that could trigger a bar will be disclosed. In KSEA's view, patent prosecution bars are only relevant to information about new inventions and technology still under development, while discovery in the instant case pertains only to information about existing patents and products already subject to widespread public use whose structural and operational information easily could be discovered through reverse engineering. (Dkt. No. 94 at 4-5.) Because the gravamen of KSEA's argument is that the Court should reject a patent prosecution bar altogether, it does not address the scope of a bar in its motion. In its reply, however, while reiterating its position that a prosecution bar is unnecessary, KSEA also argues that in the event the Court deems a prosecution bar appropriate, any such provision should be limited to ...


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