Lego A/S et al v. Best-Lock Construction Toys, Inc.
RULING granting in part and denying in part 90 Motion for Protective Order; granting in part and denying in part 94 Motion for Protective Order. The parties are directed to submit a protective order consistent with the attached Ruling. Signed by Judge Charles S. Haight, Jr on December 11, 2012. (Caldwell, M.)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF CONNECTICUT
LEGO A/S, and LEGO SYSTEMS, INC.,
BEST-LOCK CONSTRUCTION TOYS,
RULING ON MOTIONS FOR PROTECTIVE ORDER
HAIGHT, Senior District Judge:
On July 11, 2012 the Court filed its Ruling on Defendant's Motion for Preliminary Injunction
[Doc. 79], reported at 2012 WL 2829454, familiarity with which is assumed. That Ruling deferred
decision on the parties' cross- motions for preliminary injunctions until certain specified areas of
discovery had been completed and the need for a further evidentiary hearing considered.
This action for copyright infringement is replete with commercially sensitive issues and
involves very considerable sums. Not surprisingly, counsel for the parties perceived early on the
need for protective confidentiality orders in aid of discovery and continuing litigation. The most
recent submissions of counsel address that subject: see Docs. 90, 91, 93, 96, 97, and 98. These
voluminous papers demonstrate that the attorneys for both sides have made good faith efforts to
agree upon a mutually satisfactory protective order. The Court salutes counsel for those efforts.
Much progress toward a Peace Treaty was made, but two points of conflict remain. This Ruling
Counsel have exchanged and re-exchanged proposed drafts which seek to achieve a single
comprehensive protective order applicable to all parties and all phases of the litigation. During the
course of that cooperative venture, areas of agreement expanded and points of dispute were
narrowed. The Court's attention is now directed to Exhibit 1 to a LEGO brief [Doc. 97], which the
brief characterizes as "a document showing a comparison between the two proposed orders." Id. at
1. Referring to that document [Doc. 97-1], LEGO's brief continues: "The LEGO Group does not
oppose the changes made by Best-Lock other than those made to paragraphs 5 and 6 – dealing with
'Confidential' and 'Highly Confidential' material respectively." [Doc. 97] at 2.
Accordingly, the only disputes between the parties with respect to the protective order arise
out of ¶¶ 5 and 6 of the current draft ("the Draft Order"). These two paragraphs deal with "Discovery
Material" designated by the "Designating Party" as either "Confidential" or "Highly Confidential."
Such designations "shall be made in good faith by the Designating Party and made at the time of
disclosure, production, or tender . . . " Draft Order at ¶ 4. A Designating Party may designate as
"Confidential" any Discovery Material believed to contain "non-public, confidential or proprietary
information . . . " ¶ 2. A Designating Party may designate as "Highly Confidential" any Discovery
Material that the Party "in good faith believes constitutes, reflects, or concerns trade secrets" or other
sorts of material "the disclosure of which is likely to cause harm to the competitive position of the
Designating Party." ¶ 3.
The Draft Order follows these broad provisions with paragraphs which undertake to limit the
persons to whom disclosure of covered material may be made. ¶ 5 performs that function with
respect to "Confidential" material; ¶ 6 performs it with respect to "Highly Confidential" material.
Each paragraph provides in preliminary fashion that such material "may be disclosed, described, or
otherwise communicated or made available in whole or in part, directly or indirectly, only to the
following persons: . . . . " The two paragraphs' designations differ somewhat, but I need not recite
them fully: for present purposes, it is sufficient to discuss the two particular points upon which
disputes have arisen.
¶ 5(b) provides for disclosure of Confidential material to "employees" of the parties, defined
as "current employees, directors or officers for each of the parties to this action." (Such individuals
are distinguished from employees of "Counsel for the named parties in this action," who are dealt
with separately in ¶ 5(a)). The version preferred by LEGO allows disclosure to a party's "employees"
if "counsel reasonably believes that disclosure to such persons may assist in the prosecution or
defense of this action." The version preferred by Best-Lock fashions a procedure whereby the
"receiving party" of discovery material must "notify the producing party that the receiving party
desires to disclose specified items to Confidential Information to identified employee(s) of the
receiving party." If after exchanges of views by the parties a dispute exists with respect to whether
particular material may be disclosed to particular individuals, "the disclosure question may be
referred to the Magistrate Judge assigned to this case."
¶ 6(b) of the Draft Order deals – or refuses to deal – with disclosure of Highly Confidential
material to "inside counsel for the named parties in this action." I phrase the proposition in that
manner because LEGO prefers disclosure to "inside counsel" under certain circumstances, while
Best-Lock would bar any such disclosure outright. ("Inside counsel" are distinguished from "outside
counsel" for the parties, to whom disclosure is permitted by ¶ 6(a), as one would expect in a
document drafted by outside counsel). LEGO's version allows disclosure of Highly Confidential
material to inside counsel "who either have responsibility for making decisions dealing directly with
this litigation or who are assisting outside counsel in this litigation, provided that such inside counsel
exercise no competitive decision making authority on behalf of any named party."
Protective orders limiting access to confidential or highly confidential information are
commonplace in litigation involving trade secrets, research, product development, marketing plans,
and other forms of commercial conduct or expression. Where, as here, the parties compete with each
other directly in a specialized market, the need for protective orders is maximized, as is the number
of judicial decisions considering them. The briefs of counsel in the case at bar cite many cases.
However, whether a protective order should issue and what it should say are fact-intensive questions,
a reality diminishing the precedential value of decisions in a much-litigated area of the law. The
broader principles are easy enough to identify. "Where a party seeks a protective order restricting
the scope of discovery of technical, proprietary information, the court should balance the interests
of full disclosure of relevant information and reasonable protection from economic injury. . . . The
competing interests to be evaluated in determining the outcome of such a dispute are one's right to
broad discovery and the other party's ability to protect its confidential materials from misuse by
competitors." Infosint, S.A. v. H. Lundbeck A.S., No. 06CIV2869, 2007 WL 1467784 (S.D.N.Y. May
16, 2007) (citations and internal quotation marks omitted).
Applying those salutary principles to this case, I conclude, first, that the procedure Best-Lock
suggests for the dissemination of Confidential material to employees of a receiving party furthers
those principles and consequently should be included in the protective order. The procedure gives
gives both parties, if so advised, the right and a protocol by which to seek protection (rightly or
wrongly, that is for another day) of "its confidential materials from misuse by competitors." I think
that LEGO's brief overstates the complexities, delays and expenditures of time that the procedure
may generate. I assume that as discovery goes forward, counsel will demonstrate the professionalism
that has marked this case thus far. There may be no objections to disclosure to speak of, in which
event inclusion of the procedure in the protective order causes no harm. On the other hand, if
objections abound and some are justified, that would indicate that the nature, degree and intensity
of the parties' competition require an extra layer of judicial scrutiny, lying easily within the
competence of an able Magistrate Judge. The Court resolves this dispute in favor of Best-Lock.
As for the inside counsel dispute, I resolve it in favor of LEGO and the protective order will
include its version of ¶ 6(b). This is a complex and complicated case. It is not difficult to imagine
that LEGO's ability to conduct effective litigation will be enhanced by the contribution of its insider
counsel, who would need to be informed in order to contribute most meaningfully. "Whether it is
appropriate for [LEGO's inside counsel] to be denied access to [Best-Lock's] 'highly confidential'
information depends on whether they are involved in competitive decision-making, thereby creating
a risk of inadvertent disclosure, and, if so, the hardship their exclusion would impose on
[LEGO]."Infostint, 2007 WL 1467784, at *3. In the case at bat, LEGO's proposed language
explicitly guards against that problem arising. Perhaps, in a world populated by men and women and
not angels, the risk of "inadvertent disclosure" can never be eliminated entirely, but surely that risk
can be minimized, and so it is in this case. The court will not assume that LEGO would make
disclosures to insider counsel who should not receive them; or that insider counsel to whom
disclosure is made would act dishonorably or in violation of the mandates the protective order itself
will impose upon them.
For the foregoing reasons, the motion of Plaintiff LEGO A/S for a protective order [Doc. 90]
is GRANTED IN PART and DENIED IN PART.
The motion of Defendant Best-Lock Construction Toys, Inc. for a protective order [Doc. 94]
is GRANTED IN PART and DENIED IN PART.
The parties are directed to submit to the Court for signature a Protective Order whose terms
and conditions are consistent with this Ruling.
Upon entry of that Ruling, the Court will make an Order of Reference to a Magistrate Judge
for supervision of the case in the manner described in the Ruling.
It is SO ORDERED.
Dated: New Haven, Connecticut
December 11, 2012
/s/ Charles S. Haight
Charles S. Haight, Jr.
Senior United States District Judge
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