Monster Cable Products, Inc. v. Diversified Repackaging Corporation et al

Filing 32

ORDER. Signed by Magistrate Judge Donna M. Ryu on 8/12/2011. (dmrlc2, COURT STAFF) (Filed on 8/12/2011)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 NORTHERN DISTRICT OF CALIFORNIA 11 For the Northern District of California United States District Court 10 MONSTER CABLE PRODUCTS, INC., 12 13 14 Plaintiff, v. No. C-10-05673-RS (DMR) ORDER RE PARTIES’ JOINT DISCOVERY LETTER OF JULY 19, 2011 DIVERSIFIED REPACKAGING CORPORATION, et al., 15 16 Defendants. ___________________________________/ 17 Before the court is the parties’ joint discovery letter of July 19, 2011 (“Letter”). In the 18 Letter, Plaintiff Monster Cable Products, Inc. (“Plaintiff”) requests that the court issue the Court’s 19 “Standard Protective Order”1 and compel Defendants U.S. Merchants and Diversified Repackaging 20 Corporation (together, “Defendants”) to provide Plaintiff with the identities of the sources from 21 which they obtained Plaintiff’s products. Plaintiff contends that it needs this information to bring 22 other parties who may be infringing on its trademarks into the suit.2 (Letter at 1-3.) Defendants 23 24 25 26 27 28 1 The Northern District of California has created several model stipulated protective orders for the benefit of litigants. Plaintiff did not specify with “Standard Protective Order” it wants the court to issue. 2 Plaintiff also contends that it requires Defendants’ supplier lists because Defendants have raised the first sale doctrine as an affirmative defense. (Letter at 2-3.) However, the first sale doctrine plays no role in trademark infringement cases based upon an alleged infringer’s selling of trademarked goods that are materially different than those sold by the trademark owner -- the exact forms of infringement which Plaintiff accuses Defendants of performing, (see Compl. ¶¶ 14-28). Au-Tomotive Gold, Inc. v. Volkswagen of Am., Inc., 603 F.3d 1133, 1138 (9th Cir. 2010); Meeker v. Meeker, No. 02-741-JSW, 2004 WL 2457793, at *10-11 1 oppose Plaintiff’s requests on the grounds that their supplier information is a trade secret, that 2 divulging the information will cause harm to their business, and, more broadly, that the information 3 lacks relevance to Plaintiff’s claims. (Letter at 5.) The court conducted a hearing on August 11, 4 2011. This order summarizes the rulings made by the court during that hearing. 5 Discovery of Trade Secrets 6 The Federal Rules of Civil Procedure permit courts to order discovery of trade secrets3 or 7 other confidential commercial information in a manner that restricts disclosure, such as through a 8 protective order, upon a showing of good cause. Fed. R. Civ. P. 26(c); see Nutratech, Inc. v. Syntech 9 (SSPF) Int’l, Inc., 242 F.R.D. 552, 554 (C.D. Cal. 2007). The court must strike a balance between the discovery-seeking party’s entitlement to “all information reasonably calculated to lead to the 11 For the Northern District of California United States District Court 10 discovery of admissible evidence” and the divulging party’s need for protection from “undue burden 12 . . . , including protection from misuse of trade secrets by competitors.” Brown Bag Software v. 13 Symantec Corp., 960 F.2d 1465, 1470 (9th Cir. 1992) (citations & quotation marks omitted). In 14 addition, the court should examine the discovery-seeking party’s claims and whether it has 15 “alternative discovery procedures” at its disposal to develop its case. Id. 16 17 Defendants’ Supplier Information Plaintiff alleges that Defendants have infringed on its trademarks by repackaging its genuine 18 products and supplying them with a new warranty. (Compl. ¶¶ 13-14.) See Beltronics USA, Inc. v. 19 Midw. Inventory Distrib., LLC, 562 F.3d 1067, 1072-74 (10th Cir. 2009) (holding that warranty 20 alterations may lead to finding of trademark infringement); Enesco Corp. v. Price/Costco, Inc., 146 21 F.3d 1083, 1086 & n.4 (9th Cir. 1998) (noting that repackaging can constitute trademark 22 infringement). According to Plaintiff, these actions have materially altered their products, creating 23 “the potential and/or likelihood of confusion as to the source and/or quality” of the goods and 24 potentially damaging customer goodwill toward Plaintiff’s products. (Compl. ¶¶ 15.) See 15 U.S.C. 25 § 1114(1)(a); Beltronics USA, Inc., 562 F.3d at 1072-74 (noting that sale of materially altered goods 26 27 (N.D. Cal. July 6, 2004) (not reported in F. Supp. 2d). 3 28 Courts repeatedly have found supplier lists to constitute confidential documents. Nutratech, Inc. v. Syntech (SSPF) Int’l , Inc., 242 F.R.D. 552, 554 n.2 (C.D. Cal. 2007) (citations omitted). 2 El Greco Leather Prods. Co. v. Shoe World, Inc., 806 F.2d 392, 395 (2d Cir. 1986) (same). Plaintiff 3 also asserts that the entities who supplied Defendants and Costco with Plaintiff’s products may be 4 liable for contributory infringement. Plaintiff therefore requires their identities so that it may bring 5 them into the current action. (Letter at 3.) See Sealy, Inc. v. Easy Living, Inc., 743 F.2d 1378, 1382 6 (9th Cir. 1984) (“[I]f a . . . distributor . . . continues to supply its product to one whom it knows or 7 has reason to know is engaging in trademark infringement, the [distributor] is contributorily 8 responsible for any harm done as a result of the deceit.” (brackets in original) (emphasis removed) 9 (quoting Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844, 854 (1982)). In addition, Plaintiff 10 stated during the hearing that it did not have the technology or internal infrastructure in place to 11 For the Northern District of California which leads to customer confusion and damage plaintiff’s goodwill constitutes trademark violation); 2 United States District Court 1 reliably determine the identities of Defendants’ suppliers from its products’ serial numbers. The 12 court therefore finds that Plaintiff has established good cause to compel discovery of Defendants’ 13 supplier lists. 14 Thus, although Defendants’ supplier names are a protectable trade secret, they are subject to 15 discovery in this case because they are relevant to the identification of potentially contributing 16 infringers and their identities cannot be ascertained through other reasonable means. However, the 17 supplier names should be protected through an appropriate protective order that limits their use to 18 this litigation, as well as limits their disclosure to outside counsels’ attorneys’ eyes only consistent 19 with the “Highly Confidential” designation in ¶ 7.3 of the Stipulated Protective Order for Litigation 20 Involving Patents, Highly Sensitive Confidential Information and/or Trade Secrets. 21 Conclusion 22 For these reasons, the court ORDERS that the parties meet and confer, and file a stipulated 23 protective order with the Court consistent with this order no later than August 17, 2011. The court 24 further ORDERS that once the protective order is in place, Defendants immediately shall produce 25 their supplier information in accordance with the protective order. Defendants’ supplier information 26 shall be designated highly confidential, attorneys’ eyes only, and the information shall not be 27 accessible to Plaintiff’s in-house counsel. See Omega S.A. v. Costco Wholesale Corp., No. 04- 28 3 1 5443-TJH, 2005 WL 6411417, at *2 (C.D. Cal. June 8, 2005) (not reported in F. Supp. 2d). The 2 supplier information shall not be used for any purpose outside of this litigation. 3 onna M NO RT Dated: August 12, 2011 7 9 10 11 For the Northern District of California ER . Ryu A N F D IS T IC T O R C DONNA M. RYU United States Magistrate Judge 8 United States District Court Judge D H 6 ERED R NIA O ORD IT IS S FO 5 S DISTRICT TE C TA LI UNIT ED S IT IS SO ORDERED. RT U O 4 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4

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