United States District Court, N.D. California, San Jose Division
June 11, 2015
AVAGO TECHNOLOGIES, INC., et al., Plaintiffs,
IPTRONICS INC., et al., Defendants.
ORDER GRANTING-IN-PART DEFENDANTS' MOTION TO ENFORCE PROSECUTION BAR AND REMEDY PROTECTIVE ORDER VIOLATION
(Re: Docket No. 546)
PAUL S. GREWAL, Magistrate Judge.
Four years ago in this case, the court entered a stipulated protective order patterned on the Northern District's Model Protective Order. The order was explicit that any individual who receives highly confidential, attorney's eyes only or source code information may not "be involved in the prosecution of patents or patent applications relating to laser drivers (including but not limited to VCSEL drivers), transimpedance amplifiers, parallel optical interconnects, and optical communication systems (using VCSELs)." Despite this unambiguous bar on prosecution, Plaintiffs Avago Technologies, Inc., et al.'s expert, Dr. Dennis Deppe, prosecuted at least one patent and patent application relating to optical communication systems using VCSELs, parallel optical interconnects and laser drivers (including VCSEL drivers) after receiving confidential information from Defendant IPtronics et al. and third parties. IPtronics now moves to enforce the prosecution bar and remedy the protective order violation. The court GRANTS-IN-PART IPtronics' motion, as explained below.
In patent cases like this one, stipulated protective orders with limits on patent prosecution are common. One party, or both, recognizes the need to produce sensitive information to the other side, but legitimately fears that the information may find its way into the other's patents and patent applications. A mere ban on such misuse is not enough; apart from the challenge of knowing what is happening in an ex parte proceeding, there is the matter of proof. "There may be circumstances in which even the most rigorous efforts of the recipient of such information to preserve confidentiality in compliance with the provisions of such a protective order may not prevent inadvertent compromise. As aptly stated by the District of Columbia Circuit, it 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.'" And so parties regularly agree to a complete ban on prosecution in technical arts similar to those of the patents-in-suit.
This case arises from Defendants' claims for infringement of Avago's patent rights under United States Patent Nos. 5, 359, 447 and 6, 947, 456, as well as for false descriptions or representations contrary to the Lanham Act and misappropriation of Avago's trade secrets. Avago retained Deppe as an expert as of the date it filed the original complaint in June 2010. The parties stipulated to a protective order, which the court entered in May 2011. The relevant portion of the order states:
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 laser drivers (including but not limited to VCSEL drivers), transimpedance amplifiers, parallel optical interconnects, and optical communication systems (using VCSELs), including without limitation the Patents-in-Suit and any patent or application claiming priority to or otherwise related to the Patents-in-Suit, 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) nor does it include sharing work product based on information and material obtainable from asserted public prior art. 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.
The "relating to" language in this provision is taken from this court's "model protective order for litigation involving patents, highly sensitive information and/or trade secrets." The prosecution bar defines the activity precluded as "including drafting, amending, advising, and affecting the scope or maintenance of patent claims." It also defines the subject matter prohibited: topics "relating to laser drivers (including but not limited to VCSEL drivers), transimpedance amplifiers, parallel optical interconnects, and optical communication systems (using VCSELs)" as well as the precise subject matter of the patents-in-suit. The prosecution bar applies when a person first receives designated confidential information and stays in effect until two years after the final termination of this action.
Roughly one year later, Avago disclosed Deppe as an expert to IPtronics. Consistent with this disclosure, Deppe received information designated by IPTronics and third parties as "Highly Confidential-Attorneys' Eyes Only." But even as he received this information, Deppe was named inventor on and involved in the prosecution of U.S. Patent No. 8, 774, 246, filed in January 2012, and U.S. Patent Application No. 14/282, 547, filed in May 2014-a continuation-in-part of the application that resulted in the issuance of the 246 patent. The 246 patent was omitted from the list of pending applications in Deppe's curriculum vitae filed with the court in April 2012.
Claiming that both the 246 patent and the 547 application refer to optical communication systems using VCSELs, parallel optical interconnects and laser drivers, including VCSEL drivers,  IPtronics now seeks an order that (i) Deppe immediately return all designated information he has received in this action and confirm he will make no further use of such information, (ii) Deppe be precluded from testifying in this action and (iii) Avago and its counsel be jointly and severally sanctioned for violation of the stipulated protective order in the form of fees and costs.
The court has jurisdiction under 28 U.S.C. §§ 1331, 1338(a), 1338(b) and 1367(a). The matter was referred to the undersigned pursuant to Fed.R.Civ.P. 72(a).
Remedies such as "[p]reclusive sanctions are within the court's discretion." Magistrate judges may issue monetary and other non-dispositive sanctions.
Fed. R. Civ. P. 37(b)(2)(A) authorizes remedies for violations of protective orders. These remedies include "prohibiting the disobedient party from... introducing designated matters in evidence." Violation of a prosecution bar also may require a return of any confidential information and a limitation on testimony. In addition, "the court must order the disobedient party, the attorney advising that party, or both to pay the reasonable expenses, including attorney's fees, caused by the failure, unless the failure was substantially justified or other circumstances make an award of expenses unjust." "[T]o determine if conduct violates a protective order, courts focus on the terms of the order itself." With this focus, the court is persuaded that Deppe violated the protective order and that remedies are warranted.
First, Deppe's prosecutions plainly relate to optical communication systems using VCSELs, parallel optical interconnects and laser drivers.
As for optical communication systems using VCSELs, both the 246 patent and the 547 application disclose VCSELs and explicitly reference active optical cables. Avago itself has contended that active optical cables are optical communication networks within the scope of the 447 patent.
As for parallel optical interconnects, the 246 patent and the 547 application both "have applications in... high speed optical interconnects" and their "[d]isclosed embodiments include semiconductor light sources including diode lasers and arrays of such lasers." The inventions claimed provide advantages when used in transceivers and can be embodied in arrays. As Deppe himself stated in this case, "Parallel Optical Devices (PODs') use, among other things, an array of VCSELs and a receiver photodiodes... that allow communications rates of 2, 4 or 12 times faster than a single channel transceiver device... 2- and 4-channel PODs typically include both VCSELs and receiver photodiodes, and are thus a transceiver."
As for laser drivers, the 246 patent and 547 application both relate to the use of a light source or laser to drive another light source. The 246 patent describes "the light sources can be driven with low voltage drive, " discloses an embodiment as being "directed to compound semiconductor light sources used to drive a second light source within the vertical cavity, " and claims "a conducting channel within said inner mode of confinement region that physically contacts and is framed by said [depleted heterojunction current blocking region], wherein said DHCBR forces current flow into said conducting channel during operation of said vertical light source." "Claim 1 of the 547 application is directed to a type of VCSEL that emits light that enters the active region of a second semiconductor laser to optically drive the second laser to emit light of a desired wavelength. An example would be a VCSEL to optically drive an edge emitting laser." The claimed inventions therefore take into account parameters for driving light sources including VCSELs, or lasers.
Avago argues that "the 246 patent and the 547 application claim the structure of VCSELs and not the use or interaction of these VCSELs with other optical components." But the prosecution bar is not narrowed to claimed structures alone. Avago further notes that IPtronics does not make or sell VCSELs and has no information that would be useful for a patent application relating to VCSEL structure. But third-parties who have disclosed confidential information to Avago do make VCSELs,  and IPtronics sells laser drivers and transimpedance amplifiers for use with VCSELs-technologies specifically addressed by the prosecution bar.
Second, Avago's attacks on IPtronics' experts do not hold weight. Avago argues that if Deppe has violated the language of the prosecution bar, so too have IPtronics' experts Constance Chang-Hasnain and Phillip Edwards. But there is no motion to exclude Chang-Hasnain and Edwards before the court. And even if Chang-Hasnain and Edwards have prosecuted patents related to the topics precluded in the prosecution bar, the prosecution bar does not apply to them if they did not gain access to confidential information in this action.
Third, Avago's argument that IPTronics effectively waived any right to complain is unavailing. It is true that Deppe's involvement in the related International Trade Commission investigation, his designation as an expert with access to confidential information and his testimony at the Markman hearing all occurred long ago. The protective order indeed requires the party to object to disclosure of "Highly Confidential-Attorneys' Eyes Only" material to an expert within 14 days. But the ITC investigation did not include a prosecution bar. And the protective order has two distinct provisions: one for objecting to disclosures and the other for enforcing the prosecution bar. The prosecution bar is not triggered until after the expert receives confidential information, and nothing suggests that after discovering Deppe's prosecution efforts IPTronics lay in wait to enforce it.
Turning to the appropriate remedy, for starters Deppe must return any IPtronics designated information and may not use that information for any purpose. In addition, any testimony from Deppe is excluded from this action. IPtronics and third parties have relied on the terms of the stipulated order in disclosing their designated information, and Deppe's prosecution potentially harmed those who did disclose such protected information. "The risk of inadvertent disclosure by expert witnesses who process patents themselves is amply demonstrated by the fact that potential experts for [parties] have already declined to serve as experts in light of the  prosecution bar." IPtronics points out the difficulty in separating out confidential information in testimony, and the unreasonable lack of trust such a violation fosters. Avago has policed IPtronics' reliance on experts based on the prosecution bar, and the same standard should apply to Avago. While there is no doubt Avago will be challenged by the exclusion of any Deppe testimony, this is a challenge of its own making, and in any event, Avago can still retain another expert. Reports are not due until September 18, and Avago has been on notice of Deppe's violations since at least February 4, 2015.
The court declines to sanction Avago and their counsel. Deppe's failure to comply with the protective order may not have been substantially justified, but the court cannot say that Avago or its counsel should be held to account for it. Under such circumstances, an award of expenses would not be just.
IPtronics' motion to enforce the prosecution bar and remedy Avago's protective order violation is GRANTED-IN-PART. While IPtronics is not entitled to expenses, Deppe must return all designated information and promise not to use it, and his testimony is excluded from this case.