Ubiquiti Networks, Inc. v. Kozumi USA Corp. et al

Filing 101

ORDER RE: JOINT STATEMENT REGARDING PROTECTIVE ORDER re 100 Document E-Filed Under Seal, filed by Ubiquiti Networks, Inc. Signed by Judge Jacqueline Scott Corley on November 26, 2012. (wsn, COURT STAFF) (Filed on 11/26/2012)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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Northern District of California

United States District Court

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UBIQUITI NETWORKS, INC.,

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Plaintiff,
v.

Case No.: 12-cv-2582 CW (JSC)
ORDER RE: JOINT STATEMENT
REGARDING PROTECTIVE ORDER
(Dkt. No. 100)

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KOZUMI USA CORP., et al.,
Defendants.

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Pending before the Court is the parties’ Joint Statement Regarding Protective Order
(Dkt. No. 100) wherein Plaintiff seeks modification of the Stipulated Protective Order (Dkt.
No. 89). Plaintiff requests that the Protective Order be modified to 1) allow in-house counsel

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access to all items designated as “HIGHLY CONFIDENTIAL – ATTORNEYS’ EYES

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ONLY” (“AEO”) under the protective agreement, and 2) eliminate the “prosecution bar”

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language. Having carefully considered the parties filing, the Court finds the matter suitable
for disposition without a hearing pursuant to Civil Local Rule 7-1(b) and hereby DENIES
Plaintiff’s request without prejudice.

DISCUSSION

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Under the Federal Rules of Civil Procedure, a party “may obtain discovery regarding

information need not be admissible at the trial if the discovery appears reasonably calculated

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to lead to the discovery of admissible evidence.” See Fed. R. Civ. P. 26(b)(1). The Court may

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“issue an order to protect a . . . person from . . . undue burden,” including “forbidding the

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disclosure or discovery,” “specifying the terms, including time and place, for the disclosure or

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discovery,” “forbidding inquiry into certain matters, or limiting the scope of disclosure or

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discovery to certain matters,” or “requiring that a trade secret or other confidential research,

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development, or commercial information not be revealed or be revealed only in a specified

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Northern District of California

any nonprivileged matter that is relevant to any party’s claim or defense . . . Relevant

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United States District Court

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way.” Fed. R. Civ. P. 26(c). The party seeking a protective order bears the burden of showing

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good cause justifying issuance of the order.

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In Brown Bag Software v. Symantec Corp., 960 F.2d 1465, 1470 (9th Cir. 1992), the

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Ninth Circuit set forth a balancing test for motions to modify a protective order. Courts

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should weigh 1) the risk of “inadvertent disclosure” of the confidential information against 2)

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the risk that protection of the confidential information might impair the other party’s ability to

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prosecute its claims. Id. In Brown Bag, the court denied the motion to modify the protective

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order because Plaintiff failed to “demonstrate how the protective order actually could have or

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did prejudice its case.” Id. at 1472.

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Here, Plaintiff’s request to modify the AEO portion of the protective order is both

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substantive and procedural; that is, Plaintiff contends that as a substantive matter in-house

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counsel should be permitted access to confidential information because the parties here are

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not competitors and in-house counsel is not involved in “competitive decisionmaking” relying

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on U.S. Steel Corp., v. United States, 730 F.2d 1465, 1468 (Fed. Cir. 1984). As a procedural

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matter, Plaintiff challenges the scope of Defendants’ AEO designation.

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Addressing the procedural issue first, Plaintiff contends that Defendants have abused

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the protective order by designating nearly all the documents produced as AEO. To the extent

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that this is true, the Protective Order provides a means for a party to challenge designation of

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documents as confidential. (Dkt. No. 89 at ¶ 6 (requiring the designating party to bring a

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motion to retain confidentiality of challenged material if the parties are unable to resolve a

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dispute following meet and confer).) Accordingly, if Plaintiff contends that the documents

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identified in the joint letter brief, and any others, were improperly designated as AEO,

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Plaintiff should utilize the mechanism provided for in the Protective Order to challenge the

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designations, a mechanism that requires the designating party to prove that the documents are

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highly confidential. Given that the purportedly “highly confidential” documents include

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emails sent to third parties with no apparent obligation to keep them confidential, and the

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sheer number of documents designated as highly confidential, it appears likely that

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Defendants have overused the AEO designation.

Northern District of California

United States District Court

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With respect to Plaintiff’s substantive challenge, the Court finds that a blanket

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modification of the protective order to allow access to all AEO materials is not appropriate.

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The Declaration of Jessica Zhou, General Counsel for Plaintiff, (Dkt. No. 94) states that she

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needs “to see all of the information that defendants produce in this ligation . . . in order to

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assess the strengths and weaknesses in our case and evaluate the desirability of settlement.

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This information will also help me direct the course of the litigation.” (Dkt. No. 94 ¶ 5.)

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While this may provide a basis for Ms. Zhou to view some of Defendants’ confidential

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information, it does not provide a basis for Ms. Zhou to have access to source code or other

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technical confidential information. Under the second prong of the balancing test set forth in

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Brown Bag, the Court looks to potential prejudice to the moving party of being denied this

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information. Plaintiff has not shown why in-house counsel needs access to highly confidential

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technical information to evaluate settlement or manage the litigation. Plaintiff’s generalized

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assertion that all in-house counsel need copies of all AEO materials fails to provide the Court

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with all of the information it needs to “factually [examine] all the risks and safeguards

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surrounding inadvertent disclosure by any counsel, whether in-house or retained… [and] the

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nature of the claims and of a party’s opportunity to develop its case through alternative

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discovery procedures.” Brown Bag Software, 960 F.2d at 1470. Plaintiff’s request to modify

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the Protective Order is thus denied without prejudice to renewal accompanied by a specific

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showing regarding which particular AEO material Plaintiff contends in-house counsel needs

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access to and why.

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Finally, with respect to Plaintiff’s challenge to the “prosecution bar” language in the

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protective order, the parties are ordered to meet and confer regarding this matter. The parties

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could agree to a more narrowly tailored version of the prosecution bar which would limit the

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bar to prosecution of patents against Defendants rather than any patents “relating to wireless

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networking equipment design or operation.” (Dkt. No. 89 ¶ 8.) The threshold inquiry into the

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propriety of a prosecution bar looks at whether “the information designed to trigger the bar,

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the scope of activities prohibited by the bar, the duration of the bar and the subject matter

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covered by the bar reasonably reflect the risk presented by the disclosure of proprietary

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competitive information.” Applied Signal Tech., Inc. v. Emerging Markets Communications,

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Inc., No. 09-02180, 2011 WL 197811, at *2 (N.D. Cal. Jan. 20, 2011) (internal citations and

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quotations omitted). On the present record, the Court lacks sufficient information to evaluate

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the propriety of the prosecution bar. If the parties are not able to resolve this issue through

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further meet and confer, Plaintiff may renew its request to modify the prosecution bar portion

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of the Protective Order.

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CONCLUSION

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Whether the protective order requires modification, and how and to what extent,

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depends on what documents are at issue. For example, it may be perfectly appropriate for the

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protective order as currently written to apply to Defendant’s source code as currently

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designated (AEO). On the other hand, there may be other documents which Plaintiff’s in-

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house counsel desire to review which, in fact, should not be designated AEO at all. Similarly,

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the prosecution bar may be warranted as to some documents and not as to others, or a

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different version of the bar may be appropriate, again, depending on the documents at issue.

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The first step in this analysis is to determine what documents should, in fact, be designated

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AEO. When the category of AEO documents is narrowed, the Court can determine whether

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and which properly-designated AEO documents in-counsel should be allowed to review.

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This Order disposes of Docket No. 100.

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IT IS SO ORDERED.

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Dated: November 26, 2012
_________________________________
JACQUELINE SCOTT CORLEY
UNITED STATES MAGISTRATE JUDGE

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Northern District of California

United States District Court

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