United States District Court, D. Nebraska
CFGENOME, LLC, a Delaware limited liability company; and DR. M. ROHAN FERNANDO, an individual; Plaintiffs,
STRECK, INC., Defendant.
MEMORANDUM AND ORDER
R. Zwart, United States Magistrate Judge
CFGenome, LLC and Defendant Streck are direct competitors.
Plaintiff Fernando previously worked for Streck, and he now
works for CFGenome, LLC. The parties' lawsuit centers on
whether Plaintiffs misappropriated Streck's trade secrets
regarding the development and marketing of blood collection
tubes (“BCT”); specifically, Streck's
Cell-Free DNA BCT® (“Cell-Free BCT”) (a
project Fernando worked on while at Streck). CFGenome
marketed a competing product, the Exo DNA ProTeck BCT
(“Pro-teck BCT”), after Fernando started working
at CFGenome. CFGenome seeks a declaration that its ProTeck
BCT was not invented through misappropriation of Streck's
trade secrets: Streck counterclaims for misappropriation of
trade secrets and breach of contract.
parties agree that to effectively pursue discovery and
prepare for trial, they need a protective order. They do not
agree on whether that protective order should include a
patent prosecution bar, an attorneys' eyes only provision
(“AEO”), or both. Plaintiffs argue that the
protective order in this case should include a patent
prosecution bar to protect against the risk of inadvertent
disclosure of confidential information. Defendant does not
agree that a patent prosecution provision is necessary in
this case, arguing an AEO provision is
sufficient. The court required briefing on the issue.
(Filing No. 77).
participating in patent litigation in the federal courts may
be required to disclose confidential technical and
proprietary information as part of the discovery process.
Disclosure of such information to a direct competitor raises
significant concern that the information will be misused,
particularly when the competitor's counsel serves as both
its counsel in civil litigation before the court and as its
patent prosecutor before the Patent and Trademark Office
remedy this perceived threat of misuse, the disclosing party
may propose a protective order which includes a “patent
prosecution bar;” an order prohibiting persons who had
access to the opponent's confidential information
produced for litigation from patent prosecution before the
PTO regarding the litigation subject matter. Edwards
Lifesciences AG v. CoreValve, Inc., 699 F.3d 1305, 1316
(Fed. Cir. 2012) (citing In re Deutsche Bank Trust Co.
Americas, 605 F.3d 1373 (Fed. Cir. 2010)). A patent
prosecution bar is entered to limit the risk that counsel
will inadvertently disclose or improperly use confidential
information received and reviewed during litigation when
later performing patent prosecution work. Id. Courts
recognize that despite good faith and rigorous efforts to
maintain confidentiality, a recipient of confidential
information during litigation may unintentionally disclose or
use that information; that once learned, the confidential
information cannot be unlearned, and it may infiltrate that
attorney's future patent prosecution work on the same
subject matter. Id.
whether a trial lawyer should be denied access to information
under a protective order because of his additional role in
patent prosecution, or alternatively be barred from
representing clients in certain matters before the PTO, is an
issue unique to patent law. Deutsche Bank, 605 F.3d
at 1377. To promote nationwide uniformity, “Federal
Circuit law applies to discovery matters if the determination
implicates an issue of substantive patent law.”
Id. As such, the question of whether a protective
order in patent litigation should include a patent
prosecution bar is governed by Federal Circuit law. Id.
at 1378; Clayton Corp. v. Momentive Performance,
Materials, Inc., No. 4:12CV1349 AGF, 2013 WL 2099437, at
*1 (E.D. Mo. May 14, 2013) (Fleissig, J.). Specifically,
Deutsche Bank provides the law applicable to the
issue of whether, under the facts presented, a patent
prosecution bar is warranted.
courts have adopted and applied two different interpretations
of the Deutsche Bank standard. As thoroughly
explained in EON Corp. IP Holdings, LLC v.
AT&T Mobility, 881 F.Supp.2d 254 (D. PR 2012),
Most of the courts interpreting Deutsche Bank have
read it to require a particular two-step inquiry, step one of
which requires the moving party [to] show, on a
counsel-by-counsel basis, that there is an unacceptable risk
of inadvertent disclosure of confidential information; at the
second step, they balance that risk against the potential
harm to the non-movant.
EON Corp., 881 F.Supp.2d at 255-56 (citing
NexEdge, LLC v. Freescale Semiconductor, Inc., 820
F.Supp.2d 1040, 1043 (D. Ariz. 2010); Iconfind, Inc. v.
Google, Inc., No. 110319(GEB/JFM), 2011 WL 3501348, *5
(E.D. Cal. Aug. 9, 2011); Kraft Foods Global, Inc. v.
Dairilean, Inc., No. 10-8006, 2011 WL 1557881 (N.D. Ill.
Apr. 25, 2011)). Under this interpretation, after step one is
complete and the court has determined a risk exists based on
the competitive decisionmaking role of counsel, the court
must then determine whether the information involved in the
case is the type that would trigger a patent prosecution bar
and then must balance the risk of potential harm against the
party's right to its chosen counsel. Deutsche
Bank, 605 F.3d at 1380-81.
contrast, some courts first decide whether, "as a
threshold matter[, ] the proposed prosecution bar
'reasonably reflect[s] the risk presented by the
disclosure of proprietary competitive information.'"
[Applied Signal Technologies, Inc. v. Emerging Mkts.
Commc'ns, No. 09-2180(SBA/DMR), 2011 WL 197811 at *2
(N.D. Cal. Jan. 20, 2011)] (quoting In re Deutsche
Bank, 605 F.3d at 1381). This threshold inquiry
"essentially measures whether a prosecution bar is
reasonable" given the information at issue, the scope of
activities that would be prohibited and their subject matter,
and the duration of the bar. Id. If the court
decides the threshold is met, it then “measure[s] this
risk-rather than a risk determined by a counsel-specific
competitive decisionmaking inquiry-‘against the
potential injury to the party deprived of its counsel of
choice.'" Id. EON Corp., 881 F.Supp.2d at
distinction between these two interpretations significantly
impacts the burden carried by the party seeking a patent
prosecution provision: The first requires the movant to make
a threshold showing that a risk of inadvertent disclosure
exists based on opposing counsel's role in competitive
decisionmaking; the second requires that the movant only show
a patent prosecution bar would be reasonable in a particular
case, and after the entrance of the bar, requires the parties
to show a particular attorney should either be exempt from or
subject to the bar.
this issue is a matter of first impression in this district,
sister courts within the Eighth Circuit have followed the
first interpretation-requiring the party seeking a patent
prosecution provision to make a threshold showing that the
specific counsel is involved in competitive decisionmaking.
See Regal Beloit Am., Inc. v. Broad Ocean Motor LLC,
No. 4:16cv00111JCH, 2017 WL 35702 (E.D. Mo. Jan. 4, 2017);
Clayton Corp. v. Momentive Performance Materials,
Inc., No. 4:12CV1349, 2013 WL 2099437 (E.D. Mo. May 14,
2013); Sanders v. Mosaic Co., 09-00016-CV-W-JTM,
2012 WL 640159 (W.D. Mo. Feb. 27, 2012). The undersigned
magistrate judge agrees.
prosecution bars are imposed on a counsel-by-counsel basis
and the court must first determine “[w]hether an
unacceptable opportunity for inadvertent disclosure
exists” based upon the role of the party's counsel.
Deutsche Bank, 605 F.3d at 1378. This question
specifically turns on the extent to which counsel is involved
in “competitive decisionmaking” for his client.
‘Competitive decisionmaking' refers to
counsel's relationship with his client and his role in
advising and participating in the client's decisions
concerning pricing, product design, and other matters which
may be “made in ...