MSC.Software Corporation v. Altair Engineering, Incorporated et al

Filing 341

REPORT AND RECOMMENDATION of Special Master re 327 MOTION Permit Individual Defendants to Review Source Code that they checked into Plaintiff's Source Code Repository and to Re-Designate Knowledge Based Articles as Confidential and Brief in Support filed by Michael Hoffmann, Tom Riedeman, Stephan Koerner, Andrea Pertosa, Mark Krueger, Marc Klinger, Rajiv Rampalli Objections to R&R due by 9/17/2009 Signed by District Judge Victoria A Roberts. (CPin)

United States District Court Eastern District of Michigan Southern Division
MSC Software Corp., Plaintiff, Civil No. 07-CV-12807 v. Hon. Victoria A. Roberts Altair Engineering, Inc., et al., Defendants. ___________________________/ Recommendations of the Special Master regarding the individual Defendants' motion of August 4, 2009 (Doc. #327) Background
On August 4, 2009, the Individual Defendants filed a "Motion to Permit Individual Defendants to Re-Designate Knowledge Based Articles as Confidential and Review Source Code that they Checked into Plaintiff's Source Code Repository." (Doc. #327). On August 19, the Court referred the motion to me for a recommendation. MSC responded to the motion on August 24 (Doc. #335). The motion presented two questions: 1. Should this Court redesignate the Knowledge Base documents as Confidential because they were available to the public before November 2007, are currently available to licensed users and do not contain trade secrets of the Plaintiff?

2. Should this Court allow the Individual Defendants to review the Source Code files that Plaintiff has indicated were authored or modified by the Individual Defendants?
On August 27, I sent email to counsel for MSC, with copies to counsel for the defendants, asking for more information about the MSC knowledge base. I received the answers to my questions in an email from Janis Adams, counsel to MSC, on August 28

-1-

(attached as Appendix A). Mr. Ludden responded to this email on August 31 (attached as Appendix B), MSC's Master Software License Agreement, sent by Ms. Adams in her email, is attached as Appendix C.

The Knowledge Base
Counsel for the Individual Defendants complains that MSC has designated the copy of the Knowledge Base produced by MSC as "Highly Confidential/Attorneys' Eyes Only" ("AEO"), and that documents in the Knowledge Base "provide specific information that may be very useful in resolving the claims against the Individual Defendants and that are not equally available anywhere else." Such information would include whether a claimed trade secret was discussed or could otherwise be learned from information that was provided to the public in the Knowledge Base. Designation of the articles in the Knowledge Base as AEO prevents the Individual Defendants from personally reviewing the material. It can only be viewed by their attorneys and by experts that they employ and have agreed to be bound by the protective order. Those attorneys and experts cannot disclose any AEO information to the Individual Defendants. Paragraph 7 of the "Second Amended Stipulated Protective Order" (Doc. #321) permits designating as AEO by a party only "Confidential Information or Material which it further reasonably believes constitutes a trade secret or other highly confidential research, development, or commercial information, the disclosure of which to the other party or public would cause the producing party competitive harm." MSC has indicated that only a subset of the articles in the Knowledge Base (the "external Knowledge Base") was accessible outside of MSC. To the extent that articles in the full Knowledge Base are accessible only to MSC's employees or those who have agreed to treat it as confidential information, those articles are properly designated as AEO. With respect to articles that were in the Knowledge Base prior to November 2007, those articles were available without restriction to any person who registered on MSC's web site. There was no requirement that they had to click on, or otherwise agree to, any requirement to treat the information as a trade secret or as being provided in confidence. Clearly, the designation of any article that was in the Knowledge Base and accessible before November 2007 to any user willing to go through a registration process (possibly -2-

using a pseudonym) should not be AEO. Because the articles were available to the public without meaningful restriction, they should not even be designated as "Confidential" under the protective order. After November 2007, information in the Knowledge Base was accessible only to MSC customers with valid maintenance contracts. Their access was covered by MSC's "Master Software License Agreement," attached as Appendix C. Pursuant to Paragraph 5.1(viii) of the Agreement, MSC customers "shall not disclose, display, or permit access to or use of the Software or Documentation by persons other than Authorized Users using the Software and Documentation within the scope of the licensee acquired by Customer." Documentation is defined in Paragraph 2.3 as "user manuals and other written materials, in any form and on any media, provided by MSC for use with the Software." Articles in the Knowledge Base falls under the broad definition of "documentation." The Master Software License Agreement is generally concerned with the scope of license granted to customers using MSC's software. There are no special requirements for treating documentation as a trade secret, or that it is considered highly confidential information. In fact, the only mention of trade secrets is in paragraph 5.1, where it is in regard to the software and not its documentation: Customer acknowledges that the Software and its structure organization and source code constitute and contain valuable trade secrets of MSC and/or its suppliers. ... (emphasis added) Because the articles added to the Knowledge Base after November 2007 comes under the Master Software License Agreement, which provides for its restriction to only authorized persons, but does not treat documentation as a trade secret, those articles should not be designated as AEO but instead as "Confidential" under the protective order. Finally, if an article is available from a public source, it should not be designated under the protective order as either "Confidential" or AEO. In summary, I recommend that articles in the Knowledge Base: That are available from a public source shall not be designated under the protective order, That were in the external Knowledge Base prior to November 2007 shall not be designated under the protective order,

-3-

That were added to the external Knowledge Base after November 2007 shall be designated as "Confidential" under the protective order, and That were never available in the external Knowledge Base may remain designated as "Highly Confidential/Attorneys' Eyes Only."

The Source Code
The Individual Defendants also complain that "Plaintiff has produced the source code files that were checked into its Source Code Repository by different Individual Defendants. This material has been properly designated as AEO by the Plaintiff" but that under the Second Amended Protective Order an Individual Defendant should be allowed to see any source code for which that Individual Defendant was an "originator or author"" (quoting paragraph 15 of the protective order). MSC contends that that paragraph of the protective order does not apply to AEO information, pertaining only to information designated as "Confidential." The full text of paragraph 15 is: Notwithstanding the provisions of paragraph 4 of this Stipulated Order, documents designated as Confidential Material may be disclosed to any person indicated on the face of the document to be its originator or author, or a recipient of a copy thereof. Under the protective order AEO information is a form of "Confidential" information. Paragraph 7 states: In addition to the protections afforded Confidential Information or Material under this order, a producing party may designate any Confidential Information or Material which it further reasonably believes constitutes a trade secret or other highly confidential research, development, or commercial information, the disclosure of which to the other party or public would cause the producing party competitive harm, as "Highly Confidential/Attorneys' Eyes Only" or by otherwise so designating sections of deposition transcripts or answers to interrogatories that contain such "Highly Confidential/Attorneys' Eyes Only." (emphasis added) But paragraph 11 imposes additional restrictions on AEO: Information designated as Highly Confidential/Attorneys' Eyes Only shall be subject to all the restrictions, limitations and conditions pertaining to

-4-

Confidential Information, and in addition, information designated as Highly Confidential/Attorneys' Eyes Only shall be viewed only by outside Counsel and their expert witnesses and expert consultants retained by Counsel ... (emphasis added) It is clear that this paragraph trumps paragraph 15, and so I recommend that the Individual Defendants' request to see any MSC source code that they may have authored be denied.

/s/ Lee A. Hollaar Lee A. Hollaar, Special Master September 1, 2009

-5-

Appendix A
From: "Adams, Janis" <[e-mail]> To: "[e-mail]" <[e-mail]> CC: TOM LUDDEN <[e-mail]>, "[e-mail]" <[e-mail]>, "Saylor, Larry J." <[e-mail]>, PHILLIP SELTZER <[e-mail]>, "Hickey, Patrick" <[e-mail]>, "Hermon, James" <[e-mail]> Date: Fri, 28 Aug 2009 14:30:42 -0600 Subject: MSC v. Altair: MSC's Response to Questions Re: Knowledge Base Special Master Hollaar: This correspondence is in response to your August 27, 2009 email regarding MSC's external Knowledge Base. Answers to your questions follow: 1. With regard to the statement, "From December 2006 to November 2007, MSC's external Knowledge Base was open to registered website users": a. What restrictions, if any, were placed on who could be a "registered website user"? ANSWER: To log in as a registered website user, the end user would be required to establish an account by creating a user name and password. b. Did it simply require the person to sign up (perhaps with a pseudonym), as is the case with many other websites that require registration? ANSWER: Yes. c. Or were there other requirements, such as clicking on an agreement? ANSWER: No. 2. With regard to the statement, "In November 2007, MSC restricted access to its external Knowledge Base to MSC customers with valid maintenance contracts associated with their MSC licenses": a. What restrictions, if any, beyond being a "customer with valid maintenance contracts" were there for users of the external Knowledge Base after the November 2007 change? ANSWER: As an initial matter, all MSC customers who enter into maintenance contracts associated with their MSC licenses must first sign a Master Software License Agreement ("Agreement"), which contains confidentiality and non-6-

disclosure terms that restrict use of MSC's Software and Documentation to Authorized Users (a copy is attached below). Pursuant to Paragraph 5.1(viii) of the Agreement, an MSC "[c]ustomer shall notdisclose, display, or permit access to or use of the Software or Documentation by persons other than Authorized Users using the Software and Documentation within the scope of the licensee acquired by Customer." Documentation, which is defined as "user manuals and other written materials, in any form and on any media, provided by MSC for use with the Software," includes MSC's internal Knowledge Base. See Agreement, Paragraph 2.3. Paragraph 6.2 of the Agreement, which pertains to "Maintenance," further states, "[u]pon MSC's request, Customer shall provide information required to verify that Customer and the specific license are entitled to technical support."
<<4192_001.pdf>>

To access MSC's external Knowledge Base, MSC's customers must first create an account on the website and request that such account be "activated" to allow access to the Knowledge Base. MSC then internally verifies that the customer agreement at issue is valid prior to activating the account and allowing the customer access. b. Have those restrictions remained the same through today? ANSWER: Yes. In July 2009, MSC began issuing customer ID numbers that make it easier for MSC to confirm the customer agreement before activating the account, however, the process of verifying the customer agreement prior to activating the account remains the same. 3. What was the URL for accessing the Knowledge Base before November 2007, and what is it now? ANSWER: The URL before and after November 2007 is http://support.mscsoftware.com/kb/ If you have any additional questions, please let us know.
Janis L. Adams Attorney

Dykema
400 Renaissance Center Detroit, MI 48243 313-568-6750 (direct) 313-568-6691 (fax) [e-mail] (email) www.dykema.com

-7-

Appendix B
From: TOM LUDDEN <[e-mail]> To: TOM LUDDEN <[e-mail]>, Lee Hollaar <[e-mail]>, "Adams, Janis" <[e-mail]> CC: "[e-mail]" <[e-mail]>, "Saylor, Larry J." <[e-mail]>, PHILLIP SELTZER <[e-mail]>, "Hickey, Patrick" <[e-mail]>, "Hermon, James" <[e-mail]> Date: Mon, 31 Aug 2009 09:00:00 -0600 Subject: RE: MSC v. Altair: MSC's Response to Questions Re: Knowledge Base Professor Hollaar: The prior E Mail was inadvertently sent before I had the chance to complete it. You indicated that " No response should be made by other counsel unless it is to point out an inaccurate answer." We believe that the response by counsel is at least incomplete. MSC has produced a spreadsheet that lists what is apparently considers to be Knowledge Base Articles. Some of those documents remain available to members of the public today. The most obvious is that the spreadsheet lists a number of conference papers as being part of the Knowledge Base and designated as Attorney Eyes Only. For example, a paper entitled " Functional Digital Aircraft: Designing Flight Controls" can be found at http://www.mscsoftware.com/support/library/conf/adams/euro/2001/proceedings/papers_ pdf/Paper_22.pdf We have not made an exhaustive search to determine which papers listed in the spreadsheet and designated as Attorney Eyes Only, but there are at least some Knowledge Base Articles that remain publicly available and not available only to customers with maintenance contracts in the manner described by Ms. Adams in her E Mail to you. C. Thomas Ludden Lipson, Neilson, Cole, Seltzer & Garin, P.C. 3910 Telegraph Road, Suite 200 Bloomfield Hills, Michigan 48302 [phone] [phone] (fax)

-8-

Appendix C

-9-