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Protective Orders and Reexamination Requests (W.D. Wis.)

By Peter Zura

In an interesting order from Silicon Graphics v. ATI Technologies, Inc., No. 06-cv-611-bbc (W.D. Wis., April 22, 2008), a situation arose where the defendants and the plaintiff expressly agreed to a protective order to limit the use of confidential information related to the patents-in-suit.

A reexamination request was filed while litigation was pending. The defendants sought a stay based on the reexamination but were denied since the court case "was on track for resolution well before any reexamination proceedings could be completed."

During discovery, defendants uncovered certain non-public documents issued to the PTO relating to a continuation application that stemmed from a patent-in-suit. The defendants were convinced that this information undermined the validity of the patent, and made an effort to pass this information to non-litigation counsel. As part of the effort, defendants motioned the court to modify the protective order and allow the disclosures to take place.

Not only did the magistrate judge deny the defendant's motion (which is not terribly surprising), but went further to sanction the defendants for proposing the modified order in the first place, in light of the signed protective order:

Defendants wanted an exemption from the protective order to allow its litigation team to disclose to defendants? in-house decisionmakers and non-litigation counsel certain non-public documents issued to the United States Patent and Trademark Office relating to plaintiff?s prosecution of a continuation application based on the ?327 patent (a patent at issue in this case). Defendants? litigation counsel believed that these documents show that the original ?327 patent should never have issued. If the documents were disclosed to defendants and outside counsel, it was litigation counsel?s opinion that the documents would help defendants decide whether to ask the PTO to reexamine the ?327 patent. It is not surprising that the magistrate judge saw this request for a modification as not ?substantially justified.? Defendants argued that they had no way of knowing when they signed the order that they might discover information that would bear on matters outside the litigation; this argument did not make their case for disclosure any stronger.

The more interesting question is whether the magistrate judge was correct when he imposed fees on defendants for bringing the motion and when he directed the legal teams of both parties to wall themselves off from their clients ?to prevent the dissemination of legal advice on other matters that might be tainted by information gained from reviewing the opposing party?s confidential information.? Defendants argued that a motion to modify a protective order does not come within Fed. R. Civ. P. 37(a) so as to be subject to a monetary sanction, but they did not support their argument with any case law. Nothing in the rule suggests that it does not apply to contested motions to modify a protective order and, as the magistrate judge pointed out, the Court of Appeals for the Seventh Circuit has awarded fees in Rickels v. City of South Bend, Ind., 33 F.3d 785, 786 (7th Cir. 1994), a case involving a protective order.

It is perfectly possible to imagine a motion for modification of a protective order that is so innocuous that it would not merit an award of fees. The modification that defendants sought was far from innocuous and for that reason, bound to provoke a hard-fought defense from plaintiff. The fees that the magistrate judge imposed were appropriate, given the importance to plaintiff of insuring that the protective order was not modified to allow plaintiff?s confidential information to be employed in a new forum as defendants were proposing.

View the opinion here (link)

Full post as published by Two-Seventy-One Patent Blog on May 20, 2008 (boomark / email).