PCT International Incorporated v. Holland Electronics LLC

Filing 213

ORDER denying the 156 , 183 , 192 , 165 , 195 , 170 , 160 , 164 , 200 and 209 Motions to Seal. ORDERED striking Docs. 158 , 184 , 185 , 193 , 168 , 196 , 171 , 161 , 162 , 166 , 201 , 202 , 191 and 210 . These documen ts shall remain under seal. ORDERED denying without prejudice and striking the 157 , 169 and 175 Motions. ORDERED striking Docs. 159 , 167 , 172 , 173 , 174 , 176 , 187 , 188 , 189 , 190 , 194 , 197 , 203 , 204 , 207 , [20 8] and 211 . ORDERED denying the 163 , 186 Stipulations and the 182 , 206 Notices but the documents to which these documents refer shall remain under seal as indicated above. IT IS FURTHER ORDERED that the parties shall comply with the Court's procedure as set forth in this Order concerning the filing of motions to file under seal. The parties shall file their respective motions to file under seal within fourteen days from the date of this Order, with any responses due within the time period prescribed by Local Rule 7.2(c). Signed by Senior Judge James A Teilborg on 9/23/2014.(LFIG)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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PCT International Incorporated,
Plaintiff,

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ORDER

v.

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No. CV-12-01797-PHX-JAT

Holland Electronics LLC,

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Defendant.
I.

Background

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On the eve of the dispositive motion deadline, the parties filed a flurry of

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documents. Defendant Holland Electronics LLC (“Holland”) moves for summary

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judgment on infringement, or alternatively partial summary judgment on damages,

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against Plaintiff PCT International Incorporated (“PCT”). (Doc. 175). Holland also seeks

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to preclude PCT from arguing any theory of indirect infringement against Holland. (Id. at

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2). PCT moves to exclude Holland from relying upon the opinions of Holland’s expert

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witnesses David A. Haas and Daniel J. Whittle. (Doc. 157; Doc. 169).

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The parties seek to seal most of their filings relating to Holland’s summary

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judgment motion and PCT’s motions to exclude. Accordingly, for each document desired

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to be sealed, the filing party has filed a redacted version of the document, lodged the

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complete version under seal, and filed a motion to file under seal the lodged version. See,

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e.g., (Doc. 156; Doc. 157; Doc. 158). In many cases, the opposing party does not contest

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the motion to file under seal. See, e.g., (Doc. 182). These motions principally rely upon

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the parties’ prior designations of documents as confidential pursuant to the Court’s

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Protective Order for Confidential Information (“Protective Order”) (Doc. 53).
The Protective Order applies only to discovery, however, and states:

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Any Designated Material which becomes part of an official
judicial proceeding or which is filed with the Court is public.
Such Designated Material will be sealed by the Court only
upon motion and in accordance with applicable law. See
Kamakana v. City and County of Honolulu, 447 F.3d 1172,
1179-80 (9th Cir. 2006). This Protective Order does not
provide for the automatic sealing of such Designated
Material.

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(Doc. 53 at 6).
The Court now rules on the motions to file under seal.

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II.

Legal Standard

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A.

The Public’s Right of Access

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It has long been recognized that the public has a general right of access “to inspect

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and copy . . . judicial records and documents.” Nixon v. Warner Commc’ns, Inc., 435

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U.S. 589, 597 (1978). This right extends to all judicial records except those that have

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“traditionally been kept secret for important policy reasons,” namely grand jury

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transcripts and certain warrant materials. Kamakana v. City & Cnty. of Honolulu, 447

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F.3d 1172, 1178 (9th Cir. 2006). “Unless a particular court record is one ‘traditionally

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kept secret,’ a ‘strong presumption in favor of access’ is the starting point.” Id. (citing

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Foltz v. State Farm Mut. Auto. Ins. Co., 331 F.3d 1122, 1135 (9th Cir. 2003)). “[T]he

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strong presumption of access to judicial records applies fully to dispositive pleadings,

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including motions for summary judgment and related attachments,” because “the

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resolution of a dispute on the merits, whether by trial or summary judgment, is at the

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heart of the interest in ensuring the ‘public’s understanding of the judicial process and of

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significant public events.’” Kamakana, 447 F.3d at 1179 (quoting Valley Broadcasting

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Co. v. U.S. Dist. Ct. for Dist. of Nev., 798 F.2d 1289, 1294 (9th Cir. 1986)).

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“A party seeking to seal a judicial record then bears the burden of overcoming this

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strong presumption by meeting the ‘compelling reasons’ standard.” Id. at 1178 (citing

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Foltz, 331 F.3d at 1135). The party must “articulate compelling reasons supported by

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specific factual findings that outweigh the general history of access and the public

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policies favoring disclosure, such as the public interest in understanding the judicial

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process.” Id. at 1178-79 (internal quotation marks and citations omitted). A court

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deciding to seal judicial records must “base its decision on a compelling reason and

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articulate the factual basis for its ruling, without relying on hypothesis or conjecture.” Id.

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at 1179 (quoting Hagestad v. Tragesser, 49 F.3d 1430, 1434 (9th Cir. 1995)).

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The presumption of public access is not rebutted merely because “documents

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subject to a protective order are filed under seal as attachments to a dispositive motion.”

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Foltz, 331 F.3d at 1136. A party seeking to seal a judicial record must still meet its heavy

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burden of demonstrating compelling reasons exist for sealing. See Kamakana, 447 F.3d at

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1179.

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“In general, ‘compelling reasons’ sufficient to outweigh the public’s interest in

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disclosure and justify sealing court records exist when such ‘court files might have

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become a vehicle for improper purposes,’ such as the use of records to gratify private

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spite, promote public scandal, circulate libelous statements, or release trade secrets.” Id.

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(quoting Nixon, 435 U.S. at 598). “The mere fact that the production of records may lead

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to a litigant’s embarrassment, incrimination, or exposure to further litigation will not,

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without more, compel the court to seal its records.” Id.

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Accordingly, a party’s allegations that material is “confidential” or “business

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information” are insufficient to justify sealing court records containing such material

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unless the party proves the existence of compelling reasons for sealing. Krause v. Nev.

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Mut. Ins. Co., 2013 WL 3776146, at *5 (D. Nev. July 16, 2013) (citing Kamakana, 447

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F.3d at 1179). Moreover, because “confidentiality alone does not transform business

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information into a trade secret,” a party alleging trade secret protection as a basis for

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sealing court records must show that the business information is in fact a trade secret. St.

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Clair v. Nellcor Puritan Bennett LLC, 2011 WL 5335559, at *2 (D. Ariz. Nov. 7, 2011).

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Thus, only in extremely limited circumstances will confidential information actually

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merit the sealing of court records. See Kamakana, 447 F.3d at 1182 (finding that

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conclusory statements about the content of documents did not provide “compelling

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reasons sufficiently specific to bar the public access to the documents”).

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III.

Analysis

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Because of the large number of motions to file under seal pending in this case, the

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Court considers and rules upon each motion in the separately numbered sections that

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follow.

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1.

Docs. 158, 158-1, 158-2

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PCT seeks to file under seal the document lodged at Doc. 158 (including all

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attachments) because these documents contain or refer to “expert reports, documents and

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transcripts that were designated as Confidential or Highly Confidential pursuant to the

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Protective Order for Confidential Information.” (Doc. 156 at 2). Holland does not oppose

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this sealing, see (Doc. 182), but the Court finds that these reasons for sealing are

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insufficient under Kamakana. PCT has not articulated compelling reasons supported by

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specific factual findings that outweigh the public’s right of access. Additionally, although

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PCT asserts that Exhibit 9 to Doc. 158-1 contains information that “relate[s] to royalties

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paid by Holland under a license agreement,” (Doc. 156 at 2), information merely relating

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to royalties is not sufficient to merit sealing on the present record. PCT offers no

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evidence explaining the details of Exhibit 9, including whether this is royalty information

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or merely information tangentially related to confidential royalty amounts. The Court will

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deny the motion to file under seal at Doc. 156.

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2.

Docs. 184 and 185

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PCT seeks to file under seal the documents lodged at Doc. 184 and Doc. 185

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(including all attachments) because these contain confidential information concerning

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Holland that could be used to the advantage of Holland’s competitors. (Doc. 183).

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Holland agrees that some of these documents should be sealed. (Doc. 186). But nothing

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in the Protective Order delegated to the parties the Court’s independent duty to follow the

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law in Kamakana. This formulaic recitation concerning the purported competitive

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advantage of these documents is in the vein of a legal conclusion and is not specific facts

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showing a compelling reason to seal. See Kamakana, 447 F.3d at 1184 (“Simply

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mentioning a general category of privilege, without any further elaboration or any

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specific linkage with the documents, does not satisfy the burden.”). The Court will deny

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the motion to file under seal at Doc. 183.

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3.

Doc. 193

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PCT seeks to file under seal the documents lodged at Doc. 193 (including all

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attachments) because these documents refer to documents designated “as Confidential or

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Highly Confidential pursuant to the Protective Order.” (Doc. 192 at 2). For the reasons

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stated above, the status of these documents under the Protective Order has no

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presumptive value at the summary judgment and trial stage and therefore this assertion is

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insufficient. The Court will deny the motion to file under seal at Doc. 192.

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4.

Doc. 168

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PCT seeks to file under seal the documents lodged at Doc. 168 (including all

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attachments) because these documents refer to documents designated “as Confidential or

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Highly Confidential pursuant to the Protective Order.” (Doc. 165 at 2). For the reasons

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stated above, the status of these documents under the Protective Order has no

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presumptive value at the summary judgment and trial stage and therefore this assertion is

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insufficient. The Court will deny the motion to file under seal at Doc. 165.

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5.

Doc. 196

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PCT seeks to file under seal the document lodged at Doc. 196 because this

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document refers to documents designated “as Confidential or Highly Confidential

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pursuant to the Protective Order.” (Doc. 195 at 2). For the reasons stated above, the status

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of these documents under the Protective Order has no presumptive value at the summary

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judgment and trial stage and therefore this assertion is insufficient. The Court will deny

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the motion to file under seal at Doc. 195.

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6.

Doc. 171

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Holland seeks to file under seal the document lodged at Doc. 171 because this

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document “contains confidential PCT and Holland technical and financial information,

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and if public disclosed [sic], could be used to the advantage of Holland’s and/or PCT’s

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competitors.” (Doc. 170 at 2). For the reasons stated with respect to Docs. 184 and 185,

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this formulaic and vague assertion is insufficient as a matter of law to justify sealing. The

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Court will deny the motion to file under seal at Doc. 170.

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Docs. 161 and 162

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Holland seeks to file under seal the documents lodged at Docs. 161 and 162

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(including all attachments) because these documents contain documents designated as

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“Confidential” under the Protective Order and also contain “confidential internal business

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and financial information concerning Holland, and if publicly disclosed, could be used to

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the advantage of Holland’s competitors.” (Doc. 160 at 2-3). PCT has stipulated to file

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some of these documents under seal. (Doc. 163). For the reasons stated above, the status

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of these documents under the Protective Order has no presumptive value at the summary

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judgment and trial stage and Holland’s vague assertions regarding confidentiality and

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competitive advantage are insufficient as a matter of law to justify sealing. The Court will

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deny the motion to file under seal at Doc. 160.

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8.

Doc. 166

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Holland seeks to file under seal the document lodged at Doc. 166 because this

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document “contains confidential PCT and Holland technical and financial information,

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and if public [sic] disclosed, could be used to the advantage of Holland’s and/or PCT’s

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competitors.” (Doc. 164 at 2). For the reasons stated above, these vague assertions are

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insufficient as a matter of law to justify sealing. The Court will deny the motion to file

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under seal at Doc. 164.

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9.

Docs. 201 and 202

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PCT seeks to file under seal the documents lodged at Docs. 201 and 202

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(including all attachments) because these documents refer to documents that were

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“designated as Confidential or Highly Confidential pursuant to the Protective Order.”

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(Doc. 200 at 2). For some of the documents, PCT alleges that the documents “contain and

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reflect PCT’s confidential and proprietary information, including the specific

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measurements and internal designs of PCT’s products. This information is information

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that, if publicly disclosed, could be used to the advantage of PCT’s competitors.” (Id. at

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3). But PCT fails to articulate specific reasons showing how the information contained in

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these particular documents qualifies for trade secret protection. In particular, it appears

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unlikely that measurements can be a trade secret because every purchaser of PCT’s

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products is given this information in the form of the physical product, which is

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measureable. Thus, on this record, PCT has failed to articulate reasons compelling

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sealing. The Court will deny the motion to file under seal at Doc. 200.
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Doc. 210

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Holland seeks to file under seal the document lodged at Doc. 210 because it

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“contain(s) technical and financial information that Holland and/or PCT has designated

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as confidential under the applicable Protective Order, and that if publicly disclosed could

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be used detrimentally to Holland or PCT and/or to the advantage of Holland’s or PCT’s

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competitors.” (Doc. 209 at 2). For the reasons stated above, these vague assertions

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regarding confidentiality and competitive advantage are insufficient as a matter of law to

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justify sealing. The Court will deny the motion to file under seal at Doc. 209.

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IV.

Dispositive Motions

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Because the Court must deny the parties’ motions to file under seal, the Court

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cannot at this time rule on the merits of the underlying motions. Presumably the parties

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have attached to their pleadings only those documents necessary to decide the particular

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motion at issue, and therefore the Court should not automatically exclude those

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documents by considering the redacted versions of the motions. Accordingly, the Court

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will permit the parties to redo their motions and supporting filings so that they have an

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opportunity to present the necessary evidence.

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Unfortunately, in the first attempt at summary judgment, the parties failed to

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comply with the applicable Ninth Circuit case law regarding sealing of dispositive

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motions. The Protective Order cited Kamakana and warned that the Court would seal

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documents only “in accordance with applicable law.” (Doc. 53 at 6). Because the Court

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has an independent duty to follow the binding law of the Ninth Circuit Court of Appeals,

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the Court cannot and will not permit sealed documents absent the requisite showing of

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compelling reasons.1 The Court is prepared to make the parties redo summary judgment

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briefing until for every document sought to be sealed, either (1) the party requesting

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sealing has articulated compelling reasons supported by specific factual findings that

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outweigh the public’s right of access; (2) the party requesting sealing is willing to file the

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document without sealing; or (3) the party requesting sealing will not use the document in

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support of its filing.

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The Court will set two deadlines: one for filing motions to file under seal and a

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later deadline for dispositive motions. There are three motions in this case that are at

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issue at the dispositive motion deadline: (1) PCT’s motion to exclude the expert opinion

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of David A. Haas; (2) PCT’s motion to exclude the expert opinion of Daniel J. Whittle;

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and (3) Holland’s motion for summary judgment (and alternatively, for partial summary

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judgment and to preclude any theory of indirect infringement for lack of disclosure). The

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Court refers to these three motions collectively as the “Underlying Motions.”

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Within fourteen days from the date of this Order, each party must file a Motion to

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File under Seal that identifies every document that the party will use in support of its

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filings concerning the Underlying Motions (“filings” includes motions, responses, replies,

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statements of fact, exhibits, and so forth) and that the party desires to be filed under seal.

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For each such document desired to be filed under seal, the Motion to File under Seal shall

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specify with particularity the compelling reasons why such document should be sealed.2

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The other party may, but is not required to, file a response to the Motion to File under

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Seal in which it may argue why such documents should not be sealed. No replies will be

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The Court notes that because PCT’s motions to exclude evidence are for the
purpose of excluding this evidence from summary judgment and trial, these motions fall
into the category of dispositive motions under which the compelling reasons standard is
appropriate.
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To the extent that a party seeks to use a document, sealed or unsealed, that the
other party has designated as “Confidential” or “Outside Attorneys’ Eyes Only” under the
Protective Order, nothing in this Order relieves the parties of their responsibilities under
the Protective Order.
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permitted. Each party is permitted only one Motion to File under Seal.3

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The Court will rule on the two motions, and for each document sought to be filed

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under seal, will determine whether sealing is justified. If the Court declines to permit a

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document to be filed under seal, the party seeking to use the document must either (1) not

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use the document in support of its filings or (2) file the document not under seal.4 If the

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Court permits a document to be filed under seal, the party seeking to seal the document

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may file it under seal at the appropriate time in the course of briefing the Underlying

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Motions.
At the time that the Court rules on the motions to file under seal, the Court will set

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a briefing schedule for the parties’ new versions of the Underlying Motions.

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V.

Conclusion

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For the foregoing reasons,

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IT IS ORDERED denying Docs. 156, 183, 192, 165, 195, 170, 160, 164, 200, and

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209.
IT IS FURTHER ORDERED striking Docs. 158, 184, 185, 193, 168, 196, 171,
161, 162, 166, 201, 202, 191, and 210. These documents shall remain under seal.
IT IS FURTHER ORDERED denying without prejudice and striking Docs. 157,
169, and 175.
IT IS FURTHER ORDERED striking Docs. 159, 167, 172, 173, 174, 176, 187,
188, 189, 190, 194, 197, 203, 204, 207, 208, and 211.
IT IS FURTHER ORDERED denying Docs. 163, 182, 186, 206, but the
documents to which these documents refer shall remain under seal as indicated above.
IT IS FURTHER ORDERED that the parties shall comply with the Court’s

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The Court notes that to the extent the parties can agree upon some of the facts
necessary to decide summary judgment, the parties can stipulate to those facts and avoid
the need to present the underlying documents. See LRCiv 56.1(c). This could reduce the
number of documents the parties desire to file under seal.
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Additionally, if the parties believe that a document should be sealed solely
because a non-relevant portion of that document contains confidential information, the
parties should consider stipulating to the admissibility of redacted versions.
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procedure as set forth in this Order concerning the filing of motions to file under seal.

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The parties shall file their respective motions to file under seal within fourteen days from

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the date of this Order, with any responses due within the time period prescribed by Local

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Rule 7.2(c).

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Dated this 23rd day of September, 2014.

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