Netquote Inc. v. Byrd

Filing 49

Netquote Inc. v. Byrd

Doc. 49

Case 1:07-cv-00630-DME-MEH

Document 49

Filed 07/13/2007

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 07-cv-00630-DME-MEH NETQUOTE, INC., a Colorado corporation, Plaint iff, v. BRANDON BYRD, an internet user making use of the IP Addresses 64.136.27.226 and 64.136.26.227, and MOSTCHOICE.COM, INC., a Georgia corporation, Defendants. NETQUOTE' MOTION FOR PROTECTIVE ORDER S Plaint iff NetQuote, Inc. (" etQuote", through undersigned counsel, moves for entry of N ) the attached Protective Order pursuant to F.R.C.P. 26(c), and in support of its Motion states as fo llo ws: CERTIFICATION OF COMPLIANCE WITH D.C.COLO.LCivR 7.1 Undersigned counsel certify that they conferred with Defendant' counsel and requested s that Defendant stipulate to the attached protective order for confidential commercial information and trade secrets. Defendant' counsel would not agree to any stipulated protective order. s I. INTRODUCTION It is surprising that MostChoice would not agree to a general protective order in this case. Protective orders are . . . often obtained by agreement, particularly regarding confident ial information . . . . One distinguished judge noted in 1981 that he was " naware of any case in the past half-dozen years of even a modicum of u

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complexit y where an umbrella protective order . . . has not been agreed to by the parties and approved by the Court." 8 Charles Alan Wright, Arther R. Miller, Richard L. Marcus, FEDERAL PRACTICE AND PROCEDURE § 2035 (2d ed. 2007) (citing Zenith Radio Corp. v. Matsushita Elec. Indus. Co., 529 F. Supp. 866, 889 (D. Pa. 1981) (Becker, J.)). An Order to protect NetQuote' confidential commercial information and trade secrets is s necessar y and proper. NetQuote stipulated to a protective order for discovery concerning Defendant Byrd' hard drive. See Dkt. # 41. NetQuote now seeks a similar protective order to s protect its confidential commercial information and trade secrets, as well as the additional documents Defendants will be producing. Disclosure of the confidential information Defendants have requested absent a protective order to limit its dissemination would cause substantial harm to NetQuote. II. ARGUMENT Rule 26(c) confers broad discretion on the trial court to decide when a protective order is appropriate and what degree of protection is required. Gillard v. Boulder Valley School Dist. RE-2, 196 F.R.D. 382, 386 (D. Colo. 2000) (citing Seattle Times Co. v. Rhinehart, 467 U.S. 20, 34-36 (1984)). Federal Rule of Civil Procedure 26(c)(7) provides a mechanism to limit disclosure of information revealed in discovery. Protective orders limiting disclosure of confident ial information "outinely are approved by courts in civil cases." Gillard, 196 F.R.D. at r 386. " lanket protective orders serve the interest of a just, speedy, and less expensive B determinat ion of complex disputes by alleviating the need for a delay occasioned by extensive and repeated judicial intervention." Id. NetQuote seeks to protect confidential commercial information and trade secrets. " n its O

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face, [Rule 26(c)(7)] goes beyond trade secrets to provide protection for ` ther confidential o research, development, or commercial information.' 8 Charles Alan Wright, Arther R. Miller, " Richard L. Marcus, FEDERAL PRACTICE AND PROCEDURE § 2043 (2d ed. 2007). The parties need not agree to the protective order so long as certain conditions are met. Gillard, 196 F.R.D. at 386. First, for a protective order to issue, the movant must make a thresho ld showing of good cause to believe that discovery will involve confidential or protected informat ion. Id; accord In re Estate of Trentadue, 397 F.3d 840, 865 (10th Cir. 2005) (holding that the government made a sufficient showing of good cause to justify issuance of a protective order). Second, the party must agree only to invoke the confidential designation after review of the information and based on good faith. Gillard, 196 F.R.D at 386. Third, the protective order should provide a procedure by which the confidential designation may be challenged and the burden of proof should be on the party seeking protection to establish good cause. Id. A. NetQuote Has Good Cause to Believe that Discovery Will Involve Trade Secrets and Confidential Commercial Information. NetQuote has good cause to request a protective order. Good cause may be shown " n a o generalized as opposed to a document-by-document basis." Gillard, 196 F.R.D. at 386 (citing Park way Gallery Furniture, Inc., v. Kittinger/Pennsylvania House Group, Inc., 121 F.R.D. 264, 268 (M.D.N.C. 1988)). NetQuote, at great expense, has developed sophisticated, highly confidential, proprietary computer systems and internal procedures to detect false submissions. NetQuote considers and treats these computer systems and internal procedures as trade secrets and confidential commercial information. See Declaration of Craig Shine ¶ 2 attached hereto as Exhibit 1 (hereinafter " hine Decl.". NetQuote exercises diligence to maintain the confidential nature of S )

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the trade secrets and confidential commercial information. To that end, NetQuote has never revealed the information it now seeks to protect to its competitors. NetQuote also limits access to its facility to protect this information. Id. ¶ 4. The current trade secret procedures and techno logy used to insure the quality of leads are at the heart of NetQuote' business in a highly s compet it ive industry. Id. ¶ 3. These steps taken by NetQuote to protect trade secrets and confident ial commercial information constitute a clear recognition that the survival of the company is, in part, based on the procedures and technology. Id. ¶ 4. Disclosure of the specifics of the proprietary computer systems and internal procedures, which constitute trade secrets and confident ial commercial information, would expose NetQuote to future sabotage attacks by MostChoice. Id. ¶ 5. NetQuote also seeks to protect its customer list. MostChoice and NetQuote are direct compet itors in the online insurance lead industry. Id. ¶ 10. " ourts have presumed that C disclosure to a competitor is more harmful than disclosure to a noncompetitor." EchoStar Commc' s Corp. v. News Corp. Ltd., 180 F.R.D. 391, 395 (D. Colo. 1998) (denying a motion to n compel trade secrets despite a "airly restrictive"protective order) (citation omitted). See also f R&D Bus. Sys. v. Xerox Corp., 152 F.R.D. 195, 197-98 (D. Colo. 1993) (granting a Motion for Protective Order for movants' parts and supplies sources, research and development efforts, market strategy, and customer lists and finding that the potential harm to the movant far outweighed the need for discovery); Star Scientific, Inc. v. Carter, 204 F.R.D. 410 (D. Ind. 2001) (finding that information relating to a tobacco company' consumer lists and consumer s purchasing habits, pricing information, and sales techniques were trade secrets because the informat ion was not readily obtainable, possessed economic value, and the company took steps

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to maintain secrecy of the information). In this lawsuit, NetQuote is seeking to recover based on MostChoice' wrongful efforts to steal NetQuote' customers. Disclosure of NetQuote' s s s custo mer list would add to the harm that NetQuote has suffered as a result of MostChoice' s deceptive conduct. NetQuote developed its customer list at great expense over many years. The list constitutes confidential commercial information. Shine Decl. ¶ 6. It is among the company' s most valuable assets, and therefore, NetQuote goes to great lengths to keep the list confidential. Id. ¶ 7. NetQuote would suffer substantial harm if the customer lists were revealed to its direct compet itor MostChoice. Id. ¶ 8. Moreover, doing so would serve to reward MostChoice for its egregious and illegal conduct. NetQuote also seeks to protect its financial information. The information MostChoice requested in discovery includes revenue projections, price forecasts, pricing options, and evaluat ions of proposed structures and analysis. NetQuote' financial information is confidential s commercial information that the company does not disseminate publicly. Id. ¶ 9. Disclosure of NetQuote' financial information would give MostChoice an enormous competitive advantage in s the small industry of which NetQuote and MostChoice are a part ­the on-line insurance lead generation business. As such, the disclosure would cause substantial harm to NetQuote. Id. B. The Proposed Protective Order Provides Clear Criteria for Designation, a Process for Challenges, and Leaves the Burden of Proof on the Party Seeking Protection. NetQuote seeks a two-tiered proposed protective order with specific criteria for designating information confidential. NetQuote seeks protection of only three types of informat ion: 1) confidential commercial information about the identity of its customers ­the very customers that MostChoice attempted to appropriate through its fraudulent conduct; 2)

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Net Quote' confidential financial information; and 3) confidential commercial information and s trade secrets concerning steps taken by NetQuote to stop MostChoice' false submissions. s NetQuote proposes a protective order that is limited in scope and places the burden to just ify confidentiality designations on the party seeking protection. The proposed Protective Order states that: Documents and information may only be designated confidential or highly confident ial if they meet specific criteria as outlined. Proposed Protective Order §§ 4-5 (submitted along with this motion). Documents designated as confidential may be disclosed to the opposing party, its counsel, the court, experts who sign a confidentiality statement, and others as agreed upon by both parties. Id. Highly confidential information may only be viewed by counsel. Id. at § 4.2. Further, should a party object to the designation, it need only notify the opposing party in writing. Id. at § 16. The parties will then confer in good faith regarding the designation. Id. If the parties are unable to resolve the issue within ten (10) days, the proposed Protective Order puts the burden on the party seeking to maintain the confidentiality designation to move this Court to maintain protection for the information. Id. III. CONCLUSION Courts issue protective orders as a matter of course when dealing with confidential commercial information and trade secrets. This is particularly true when the parties are direct compet ito rs such as NetQuote and MostChoice. NetQuote has shown good cause for a protective order. Further, NetQuote only seeks to protect trade secrets and confidential commercial information that relate to it business, which the owner has treated confidentially because it is of value. The protective order NetQuote proposes is not onerous and provides clear criteria for designation of confidential and highly confidential material. Moreover, the Protective

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Order clearly outlines the process for challenge and quick resolution, and it puts the burden on the party seeking the confidentiality designation to move to keep the information it has designated confidential. For the foregoing reasons, this Court should grant this motion for a prot ective order. Dated: July 13, 2007 Respect fully submitted, s/David W. Stark________________________ David W. Stark FAEGRE & BENSON LLP 3200 Wells Fargo Center 1700 Lincoln Street Denver, Colorado 80203 Tel: [phone] / Fax: [phone] E-mail: [e-mail] Daniel D. Williams Teresa Taylor Tate FAEGRE & BENSON LLP 1900 Fifteenth Street Boulder, Colorado 80302 Tel: [phone] / Fax: [phone] E-mail: [e-mail] Attorneys for Plaintiff NetQuote Inc.

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CERTIFICATE OF SERVICE I certify that on this 13th day of July, 2007, I electronically filed the foregoing NETQUOTE' MOTION FOR PROTECTIVE ORDER with the Clerk of Court using the S CM/ECF system, which will send notification of such filing to the following counsel of record: Ryan L. Isenberg, Esq. ISENBERG & HEWITT, P.C. 7000 Peachtree Dunwoody Road, Bldg 15, Suite 100 At lanta, GA 30328 [e-mail]

s/Cecil A. Kennedy____________________

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