DRK Photo v. McGraw-Hill Companies Incorporated et al

Filing 42

ORDER granting Defendant's Motion for Entry of Protective Order (Doc. 17 ). IT IS FURTHER ORDERED granting Plaintiff's Motion to Submit Newly Discovered Evidence (Doc. 21 ). Signed by Senior Judge Paul G Rosenblatt on 10/16/2012.(KMG)

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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 DRK Photo, 10 Plaintiff, 11 v. 12 The McGraw-Hill Companies, Inc., et al., 13 14 Defendants. ) ) ) ) ) ) ) ) ) ) ) CV 12-8093-PCT-PGR ORDER 15 16 Before the Court is Defendant’s Motion for Entry of Protective Order. (Doc. 17.) 17 Plaintiff opposes the motion in part (Doc. 20), and has filed a motion to submit newly 18 discovered evidence in support of its opposition (Doc. 21). For the reasons set forth below, 19 the Court will grant the protective order. BACKGROUND 20 21 Plaintiff DRK Photo, a stock photography agency, alleges that Defendant McGraw- 22 Hill, a textbook publisher, has infringed its copyright by exceeding the scope of license 23 restrictions pertaining to certain photographs and/or failing to obtain permission to use the 24 photographs. 25 Plaintiff has propounded discovery requests seeking the disclosure of information 26 concerning Defendant’s financial and business performance, strategies, and projections. 27 Defendant seeks a protective order because “[m]uch of this material constitutes non-public, 28 trade secret, and sensitive commercial information, the public disclosure of which would 1 substantially harm McGraw-Hill’s competitive market position by greatly aiding its 2 competitors.” (Doc. 17 at 4.) Defendant’s proposed protective order lists print quantities 3 among the categories of confidential, commercially sensitive material. It also requires the 4 party challenging the producing party’s confidentiality designation to bring the dispute 5 before the Court. Plaintiff agrees that a protective order is appropriate but objects to these 6 provisions. 7 DISCUSSION 8 Federal Rule of Civil Procedure 26(c) provides that upon a showing of “good cause” 9 a court may enter a protective order “requiring that a trade secret or other confidential 10 research, development, or commercial information not be revealed or be revealed only in a 11 specified way.” See San Jose Mercury News, Inc. v. United States Dist. Ct., 187 F.3d 1096, 12 1103 (9th Cir. 1999). “For good cause to exist, the party seeking protection bears the burden 13 of showing specific prejudice or harm will result if no protective order is granted.” Phillips 14 ex re. Estates of Byrd v. General Motors Corp., 307 F.3d 1206, 1210–11 (9th Cir. 2002). If 15 a court finds that particularized harm will result from disclosure, then it balances the public 16 17 18 19 20 21 22 23 24 and private interests to decide whether a protective order is necessary. Id. at 1211. Defendant supports its request for a protective order with Declarations from Marty Lange, Vice President, General Manager, Products and Markets for Science, Engineering, Math, Health Professions and Nursing, and Roberts Simons, Senior Vice President, Finance and Operations, School Education Group, who attest that public disclosure of print-run information for the titles at issue would provide Defendant’s competitors with insight into the methods and processes by which Defendant conducts its business and would reveal sensitive sales data. (Doc. 17, Exs. 4, 5.) According to Lange and Simons, print-run information would reveal the “shape of the market for a particular category of textbook and 25 McGraw-Hill’s relative performance in that market” and permit its competitors to “skip the 26 substantial expense involved in their own market intelligence research” and aid them in 27 28 -2- 1 developing their “own marketing plans, determining which markets are vulnerable to 2 competition, and McGraw-Hill’s internal positions and expectations with regard to market 3 share.” (Id., ¶¶ 9–11.) Defendant argues that this is sensitive commercial data subject to 4 protection as confidential under Rule 26(c)(1)(G). 5 Plaintiff asserts that information concerning print quantities is not confidential 6 because Defendant itself has not treated the information as confidential. Plaintiff cites 7 instances where Defendant has disclosed its print run information. Defendant counters that 8 these limited disclosures to a photographer or agency do not indicate that such print run 9 information is publicly available. In their Declarations, Lange and Simons state that 10 Defendant limits internal access to actual and historical print-run information and that when 11 it “has revealed retrospective print-run information, McGraw-Hill has done so in the context 12 of business discussions aimed at avoiding litigation or maintaining a commercial relationship, 13 and its disclosure [was] made pursuant to a trade custom and industry understanding that 14 such disclosures are not for public dissemination.” (Doc. 17, Exs. 4, 5, ¶¶ 13, 15.) 15 16 17 18 19 20 21 22 23 24 Plaintiff also notes that Defendant “voluntarily disclosed actual print run quantities and dates to DRK” in 2010 “without requiring that this information be kept confidential.” (Doc. 20 at 7.) The Court agrees with Defendant, however, that there is a distinction between “disclosures in the context of a business discussions aimed at avoiding litigation . . . and the industry expectation that DRK Photo not disclose such print-run information to McGrawHill’s competitors.” (Doc. 24 at 7.) Defendant’s decision not to move to seal certain Exhibits is tangential to the question of whether other non-public material may be designated confidential. The Court concludes from the entirety of the record before it that Defendant has shown good cause to enter the protective order. Other courts have similarly determined that 25 a publisher established the commercial sensitivity of its print runs and related information. 26 See Wu v. Pearson Education, Inc., No. 09-6557 (S.D.N.Y.); Grant Heilman Photography, 27 28 -3- 1 Inc. v. Houghton Mifflin Harcourt Publ’g Co., No. 10-CV-00584 (E.D. Pa.); Grant Heilman 2 Photography, Inc. v. John Wiley & Sons, Inc., No. 11-CV-01665 (E.D. Pa.); Degginger v. 3 Pearson Education, Inc., No. 11-CV-01302-GP (E.D. Pa.). 4 The Court will also adopt the procedure proposed by Defendant. The objecting party 5 will bear the initial burden of challenging the confidential designation, while the designating 6 party will bear the final burden of showing good cause to maintain the document’s 7 confidentiality. This arrangement does not improperly shift the burden under Rule 26(c), and, 8 as other courts have found, it provides a direct and efficient means of identifying the specific 9 objections to a contested confidentiality designation.1 See, e.g., White v. GC Servs. Ltd. 10 P’ship, No. 08-11532, 2009 WL 174503, at *2 (E.D. Mich. Jan. 23, 2009); Johnson v. 11 Kemps, No. 09 CV 4857, 2011 WL 2550507, at *5 (N.D. Ill. June 20, 2011); Hecht v. 12 BabyAge.com, No. 3:10cv724, 2010 WL 4683749, at *3 (M.D. Pa. Nov. 10, 2010). It also 13 comports with the process set out in LRCiv. 5.6(d), which places on the submitting party the 14 initial burden of bringing a confidentiality dispute to the Court’s attention. 15 16 17 18 19 20 Accordingly, IT IS HEREBY ORDERED granting Defendant’s Motion for Entry of Protective Order (Doc. 17). IT IS FURTHER ORDERED granting Plaintiff’s Motion to Submit Newly Discovered Evidence (Doc. 21). DATED this 16th day of October, 2012. 21 22 23 24 25 26 27 1 As Defendant notes, in a similar case this Court entered a protective order mirroring the order sought by Defendant. Bean v. Pearson Education, Inc., 11-CV-8030-PGR (D. Ariz.). To the Court’s knowledge, this order has functioned as intended and has not been the subject of disputes between the parties. 28 -4-

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