Prism Technologies v. AT&T et al

Filing 67

MEMORANDUM AND ORDER - IT IS ORDERED that the joint motions for protective order governing the disclosure and use of discovery materials (Filing No. 59 in 8:12CV122, Filing No. 58 in 8:12CV123, Filing No. 55 in 8:12CV124, Filing No. 54 in 8:12CV125, and Filing No. 59 in 8:12CV126) are granted to the extent described above. The parties shall submit to the Court an amended Proposed Order incorporating the decisions of this Court as delineated herein by January 15, 2013. Ordered by Senior Judge Lyle E. Strom. (TCL )

IN THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF NEBRASKA
PRISM TECHNOLOGIES, LLC,

)
)
Plaintiff,
)
)
v.
)
)
AT&T MOBILITY, LLC,
)
)
Defendant.
)
______________________________)
PRISM TECHNOLOGIES, LLC,
)
)
Plaintiff,
)
)
v.
)
)
SPRINT SPECTRUM L.P.,
)
d/b/a SPRINT PCS,
)
)
Defendant.
)
______________________________)
PRISM TECHNOLOGIES, LLC,
)
)
Plaintiff,
)
)
v.
)
)
T-MOBILE USA, INC.,
)
)
Defendant.
)
______________________________)
PRISM TECHNOLOGIES, LLC,
)
)
Plaintiff,
)
)
v.
)
)
UNITED STATES CELLULAR
)
CORPORATION, d/b/a U.S.
)
CELLULAR,
)
)
Defendant.
)
______________________________)

8:12CV122

8:12CV123

8:12CV124

8:12CV125

PRISM TECHNOLOGIES, LLC,

)
)
Plaintiff,
)
)
v.
)
)
CELLCO PARTNERSHIP d/b/a
)
VERIZON WIRELESS,
)
)
Defendant.
)
______________________________)

8:12CV126

MEMORANDUM AND ORDER

This matter is before the Court on the joint motions
for protective order governing the disclosure and use of
discovery materials filed pursuant to Federal Rule of Civil
Procedure 26(c) (Filing No. 59 in 8:12CV122, Filing No. 58 in
8:12CV123, Filing No. 55 in 8:12CV124, Filing No. 54 in
8:12CV125, and Filing No. 59 in 8:12CV126).

These patent cases

are brought by plaintiff Prism Technologies LLC (“Prism”) against
AT&T Mobility LLC, Sprint Spectrum L.P., T-Mobile USA, Inc.,
United States Cellular Corporation, and Cellco Partnership d/b/a
Verizon Wireless (collectively, “Defendants”).
In all five cases, the parties have already agreed to
be bound by terms similar to those of the protective order
adopted by this Court in Prism Technologies LLC v. Adobe Systems
Inc., 8:10CV220 (“the Adobe Action”).

While many of the terms of

the parties’ proposed protective order are not in dispute, the
parties have submitted a joint brief identifying areas of
disagreement and an index of evidence disclosing the parties’
proposed provisions (Filing No. 60 in 8:12CV122, Filing No. 59 in
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8:12CV123, Filing No. 56 in 8:12CV124, Filing No. 55 in
8:12CV125, and Filing No. 60 in 8:12CV126) (“Joint Brief”) (See
also Ex. 3 to Filing No. 61 in 8:12CV122, Filing No. 60 in
8:12CV123, Filing No. 57 in 8:12CV124, Filing No. 56 in
8:12CV125, and Filing No. 61 in 8:12CV126 (“Proposed Order”)).
The Court rules on the disputed provisions of the proposed
protective order as follows.
I.

Applicable Law.
“A party or any person from whom discovery is sought

may move for a protective order in the court where the action is
pending . . . .

The court may, for good cause, issue an order to

protect a party or person from annoyance, embarrassment,
oppression, or undue burden or expense . . . .”
26(c)(1).

Fed. R. Civ. P.

The rule particularly allows for an order
(A) forbidding the disclosure or
discovery;
(B) specifying terms, including
time and place, for the disclosure
or discovery;
(C) prescribing a discovery method
other than the one selected by the
party seeking discovery;
(D) forbidding inquiry into certain
matters, or limiting the scope of
disclosure or discovery to certain
matters;
(E) designating the persons who may
be present while the discovery is
conducted; . . . [and]

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(G) requiring that a trade secret
or other confidential research,
development, or commercial
information not be revealed or be
revealed only in a specified way
. . . .
Fed. R. Civ. P. 26(c)(1).

“[T]he federal rules ‘confer[ ] broad

discretion on the [district] court to decide when a protective
order is appropriate and what degree of protection is
required.’”• Miscellaneous Docket Matter No. 1 v. Miscellaneous
Docket Matter No. 2, 197 F.3d 922, 925 (8th Cir. 1999) (quoting
Seattle Times Co. v. Rhinehart, 467 U.S. 20, 36 (1984)).
“Denial or grant of access [to confidential
information] . . . cannot rest on a general assumption that one
group of lawyers are more likely or less likely inadvertently to
breach their duty under a protective order.”

U.S. Steel Corp. v.

United States, 730 F.2d 1465, 1468 (Fed. Cir. 1984).

Rather,

“the factual circumstances surrounding each individual counsel's
activities, association, and relationship with a party, whether
counsel be in-house or retained, must govern any concern for
inadvertent or accidental disclosure.”

Id.

Nevertheless, courts have expressed particular concern
for a counsel who engages in “competitive decisionmaking,” a
phrase that “would appear serviceable as shorthand for a
counsel’s activities, association, and relationship with a client
that are such as to involve counsel’s advice and participation in
any or all of the client’s decisions (pricing, product design,
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etc.) made in light of similar or corresponding information about
a competitor.”

U.S. Steel Corp., 730 F.2d at 1468 n.3.

“However, since the U.S. Steel Corp. decision, courts have found
that a person can still be a ‘competitive decisionmaker’ under
the Federal Circuit’s definition even when not representing a
competitor.”

ST Sales Tech Holdings, LLC v. Daimler Chrysler

Co., LLC, CIV.A. 6:07-CV-346, 2008 WL 5634214, at *6 (E.D. Tex.
Mar. 14, 2008).

For example, in that case, the court wrote,

“[I]t is somewhat disingenuous to argue Sales Tech is not
Defendants’ competitor simply because Sales Tech is in the
business of acquiring and enforcing patents, while Defendants
manufacture and design automobiles.”

Id.

“Plaintiff and

Defendants all seek to utilize, in one manner or another,
intellectual property as part of a business model for pecuniary
gain.”

Id.
Since excluding confidential information from the eyes

of a “competitive decisionmaker” has its own ill effects for that
party, courts use a balancing test and consider factors including
(1) whether the person receiving
the confidential information is
involved in competitive decision
making or scientific research
relating to the subject matter of
the patent, (2) the level of risk
of inadvertent disclosure of
proprietary information, (3) the
hardship imposed by the
restriction, (4) the timing of the

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remedy, and (5) the scope of the
remedy.
Id. at *2.
II.

Areas of Dispute.
A.

Disclosure of Defendants’ Protected Materials

Relative to Each Other - Paragraphs 6, 8(c), and 30.

“The first

dispute between the parties relates to whether Prism’s experts
may rely on all information produced by any Defendant . . .”
(Joint Brief at 4).

“Under Prism’s proposal, Prism’s experts may

consider and include in their experts’ reports against each of
the Defendants all relevant information obtained from Defendants”
(Id.).

Prism states, “Under Prism’s proposal, such reports will

be designated Highly Confidential Attorneys’ Eyes Only (‘AEO’).
Thus, one Defendant’s information would not be shared with
another Defendant (as argued by Defendants) – only Defendants’
outside counsel and experts”

(Id. at 5 (footnote omitted)).

Prism states that “the collective information obtained
from these Defendants (which represents the majority of the
market share for the wireless data service industry) is highly
relevant to establishing the value of Prism’s patented
technology, and thus to the parties’ damages claims” (Id. at 4).
In addition, “Defendants’ proposal would effectively limit Prism
from using information that it could have obtained through
third-party subpoenas under the Federal Rules of Civil Procedure

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(e.g., Rule 45)” (Id. at 5).

Prism states that Defendants “want

to preemptively limit Prism from obtaining and using third party
discovery it is entitled to under the Federal Rules” (Id.).
Defendants, on the other hand, state that they “are
direct competitors and, in some instances, adverse to one another
in separate lawsuits.

Defendants do not want to see each other’s

Protected Materials [as defined in the proposed protective
order], and do not want their Protected Materials disclosed to
the other Defendants” (Id. at 6).

Defendants state that they

“are simply requesting that the producing Defendant be given the
opportunity to consent before its Protected Material is
disseminated to its direct competitors” (Id. at 7).
Responding to Prism’s concern about Rule 45, Defendants
state that Prism “ignores the fact that Rule 45 grants third
parties the opportunity to review and object to discovery
requests before producing information. . . .

As with Rule 45,

Defendants’ proposal simply gives the producing Defendant the
opportunity to review and object before Prism uses its Protected
Materials in another case” (Id. at 8-9 (citing
45(c))).

Fed. R. Civ. P.

Defendants state that under their proposed language,

“Prism’s outside counsel will have full access to all of the
documents produced by each of the Defendants and need only obtain
the producing Defendant’s consent, which will not be unreasonably

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withheld, before using those documents in the other actions” (Id.
at 8).
The Court agrees that “Defendants’ proposed Protective
Order reasonably allows each Defendant to control the disclosure
of its confidential information to its direct competitors without
[unduly] interfering with Prism’s ability to prosecute its case”
(Id. at 9).

Accordingly, the Court will adopt Defendants’

proposed language for paragraphs 6 and 30, and the Court will not
adopt Prism’s additional language for paragraph 8(c).
B.

Access to Attorney Eyes’ Only Information -

Paragraph 8(b) and 33.
1.

Paragraph 8(b):

Access by In-House Counsel.

Prism’s in-house counsel, Andre Bahou, is also Prism’s Vice
President and Chief Intellectual Property Officer.

Thus,

Defendants state that Mr. Bahou is “actively engaged in Prism’s
primary business:

the management, licensing, and acquisition of

technology” (Joint Brief, at 14 (citation omitted)).
not appear to contest this statement.

Prism does

Defendants assert that Mr.

Bahou is a “competitive decisionmaker” who must then be denied
access to Attorney Eyes Only information, even though he is also
Prism’s in-house counsel.
Defendants state, “Allowing Prism’s in-house counsel
access to Defendants’ highly confidential information would
expose the Defendants to the risk that their information would be
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inadvertently disclosed” (Joint Brief, at 15).

“This information

can easily be used, even unwittingly, to aid Prism in determining
what kinds of patents to acquire, which companies to sue in
future litigation, and the price of licenses or litigation
settlements” (Id.).

Consequently, Defendants propose “that

[only] two in-house counsel should have access to any license
agreements to the patents-in-suit, including settlement
agreements, that are marked as Highly Confidential – Attorneys’
Eyes Only,” and that only “in-house counsel who are responsible
for managing this litigation, and who are not involved in
competitive decision-making may obtain such access” (Id. at 1516).
Prism prefers a provision as adopted in the Adobe
Action that does not make any distinction about competitive
decisionmakers.

Prism notes that Defendants’ proposal

effectively allows in-house counsel for Defendants access that
would be denied Mr. Bahou, but Prism does not seem to suggest
that Defendants’ in-house counsel themselves should be considered
competitive decisionmakers.
Considering the factors suggested by ST Sales Tech, the
Court first finds that Mr. Bahou, Prism’s Vice President and
Chief Intellectual Property Officer, is a competitive
decisionmaker such that a significant risk exists that
Defendants’ proprietary information could be inadvertently

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disclosed and used against them in the future.

The Court notes

that this action is in the very early stages where discovery has
not yet begun and that Prism has from the beginning retained able
outside counsel that will presumably represent Prism for the
extent of the litigation.

Thus the Court finds that the denial

of access to Attorney Eyes Only information to Mr. Bahou is
appropriate, and the Court will adopt Defendants’ proposal for
paragraph 8(b).
2.
Materials.

Paragraph 33:

Archival Copies of Litigation

Prism requests that after this litigation is

concluded, each party may retain archival copies of documents
containing protected materials, still subject to the terms of the
protective order.

Defendants object, stating that “Prism’s

version of the proposed Protective Order would allow Prism’s
outside counsel and Prism itself to retain such archival copies”
(Joint Brief, at 16).

“Thus, under its proposal, Prism itself

could retain and ultimately review Highly Confidential –
Attorney’s Eyes Only Material after the conclusion of the
litigation, regardless of whether it could access such
information during the litigation” (Id.).

The Court will adopt

Defendants’ additional language for paragraph 33.
C.
9(c)(iii).

Access to Source Code - Paragraphs 9(b) and
With regard to source code, Prism makes two

propositions:

“[I]f Prism’s independent expert is restricted to
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reviewing the source code at the offices of Defendants’ Omaha
local outside counsel, then Defendants’ independent experts
should also be restricted to viewing the source code under the
same conditions” (Joint Brief, at 17).
the following paragraph 9(b):

Therefore, Prism proposes

“Regardless of the means of

production of source code as specified in section 9(a), outside
experts for the Producing Party and Receiving Party shall be
limited to the same method and means for reviewing source code”
(Proposed Order, at 9).
Similarly, Prism states, “Prism has the fair and
reasonable position in guaranteeing that experts have the same
access to the relevant evidence” (Joint Brief, at 17).

“For

example, should Defendants elect to directly produce source code
to their own independent experts as printed materials, Prism’s
proposal requires Defendants to provide Prism’s independent
expert with printouts of the same source code” (Id.).
Prism proposes the following paragraph 9(c)(iii):

Thus,

“Any

sections/electronic images of source code printed by or on behalf
of the Producing Party for the Producing Party’s outside experts
or consultants shall also be produced to the Receiving Party
marked with Bates-numbers and the legend “HIGHLY CONFIDENTIAL
SOURCE CODE – OUTSIDE COUNSEL ONLY” (Proposed Order, at 11).
Defendants state, “[T]o the extent the experts rely on
source code, they will be required to include it in their report.

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See Fed. R. Civ. P. 26(a)(2).

But to the extent they do not rely

on or consider the provided materials, such materials are exempt
from disclosure” (Joint Brief, at 19).

But Defendants do not

explain how an expert could analyze source code and then make the
determination not to include it in the expert report without
“relying” on the source code.
The Court finds Prism’s proposals reasonable in that
they provide for equal access to source code by experts for Prism
and for Defendants.

While Defendants own the source code and

have a strong interest in protecting their own trade secrets,
reasonable access must be provided to Prism and its experts for
the purposes of litigation.

The Court will adopt the additional

language proposed by Prism for paragraphs 9(b) and 9(c)(iii).
D.

Acquisition and Assertion Bar - Paragraph 23.

As

presently agreed by the parties, paragraph 23, “Restriction on
Patent Prosecution,” contains a “prosecution bar” that states
that anyone who views
“HIGHLY CONFIDENTIAL – ATTORNEYS’
EYES ONLY” or “HIGHLY CONFIDENTIAL
SOURCE CODE – OUTSIDE COUNSEL ONLY”
materials of any Producing Party
shall not, for the duration of
these actions and a period of one
(1) year following final resolution
of the Producing Party’s action
(including any appeals), draft,
supervise or assist in drafting,
amending or prosecuting any patent
claims or patent specifications (or
reissues thereof) which are
directed to technology disclosed in
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any “HIGHLY CONFIDENTIAL –
ATTORNEYS’ EYES ONLY” or “HIGHLY
CONFIDENTIAL SOURCE CODE – OUTSIDE
COUNSEL ONLY” information actually
received, including any
reexaminations, reissues, or other
pre- or post-grant proceedings
before the United States Patent &
Trademark Office (“PTO”).
(Proposed Order, at 24).

Defendants also propose an “acquisition

and assertion bar” such that “individuals who obtain access to
Defendants’ most sensitive technical information should be barred
for one year from advising any client on acquiring patents and
then suing Defendants (or related entities) for infringement
related to the very information the individual has access to as a
result of this litigation” (Joint Brief, at 25 (footnote
omitted)).
The Court notes that for the three actions brought by
Prism before this Court, Prism Technologies LLC v Research in
Motion, LTD, 8:08CV537, the Adobe Action, and the present action,
Prism has used three different outside law firms (though not
different outside local counsel).1

While this does not guarantee

that Prism will continue to retain different law firms for each
action it commences in the future, history so far suggests that
the confidential information acquired in one action could not
spill over into the next by virtue of disclosure by outside lead

1

Likewise, two of the present defendants have retained the
same outside local counsel as two of the defendants in the Adobe
Action.
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counsel.

In addition, since Mr. Bahou has been considered a

competitive decisionmaker, he will not have access to the
Attorney Eyes Only material in any event.
The Court will not add an acquisition and assertion bar
to the prosecution bar that already exists.

Therefore, the Court

will not adopt Defendants’ additional language for paragraph 23.
Accordingly,
IT IS ORDERED that the joint motions for protective
order governing the disclosure and use of discovery materials
(Filing No. 59 in 8:12CV122, Filing No. 58 in 8:12CV123, Filing
No. 55 in 8:12CV124, Filing No. 54 in 8:12CV125, and Filing No.
59 in 8:12CV126) are granted to the extent described above.

The

parties shall submit to the Court an amended Proposed Order
incorporating the decisions of this Court as delineated herein by
January 15, 2013.
DATED this 8th day of January, 2013.
BY THE COURT:
/s/ Lyle E. Strom
____________________________
LYLE E. STROM, Senior Judge
United States District Court

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