Personalized Media Communications, LLC v. Netflix, Inc.

Filing 149

ORDER terminating 140 Letter Motion to Seal; granting 143 Letter Motion to Seal. Defendant's request is GRANTED. For the reasons mentioned in this letter,the Court finds that Defendant's privacy interests outweigh the presumptionof public access to the information contained in the limited proposed redactions. The Clerk of Court is respectfully directed to close the motions pending on Dkts. 140, 143. SO ORDERED. (Signed by Judge John P. Cronan on 12/11/2020) (kv)

Case 1:20-cv-03708-JPC Document 143 Filed 12/10/20 Page 1 of 3

December 10, 2020

Orrick, Herrington & Sutcliffe LLP

12/11/2020

777 South Figueroa Street
Suite 3200
Los Angeles, CA 90017-5855
[phone]
orrick.com

Hon. John P. Cronan
United States District Court
Southern District of New York
500 Pearl Street
New York, NY 10007
Re:

Alyssa Caridis

E [e-mail]
D [phone]
F [phone]

Personalized Media Communications, LLC v. Netflix, Inc., Case No. 1:20-cv-03708

Dear Judge Cronan:
Pursuant to section 4(C) of this Court’s individual rules of practice, Netflix moves for an
order sealing portions of the following documents: (1) portions of PMC’s December 7, 2020
Reply Brief in Support Of its Motion to Compel the Production of Relevant Cadmium Source
Code (the “Reply”); and (2) portions of the Declaration of William Wong filed in support of the
Reply (the “Wong Declaration”). Like the documents at issue in Netflix’s previous letter motion
to seal, each of the foregoing documents contains Netflix source code or information about that
code, the disclosure of which would place Netflix at a significant competitive disadvantage.
The Second Circuit has set out a three-step inquiry for evaluating sealing requests. See
Lugosch v. Pyramid Co. of Onondaga, 435 F.3d 110, 119-20 (2d Cir. 2006). First, a court must
determine whether the document at issue is a “judicial document” that is “relevant to the
performance of the judicial function and useful in the judicial process.” Id. at 119 (quoting
United States v. Amodeo (Amodeo I), 44 F.3d 141, 145 (2d Cir. 1995)). Second, the court must
determine the weight of the presumption in favor of public access, given “the role of the material
at issue in the exercise of Article III judicial power.” Id. (quoting United States v. Amodeo
(Amodeo II), 71 F.3d 1044, 1049 (2d Cir. 1995)). A court’s judgment as to the weight of the
presumption “can be informed in part by tradition. Where such documents are usually filed with
the court and are generally available, the weight of the presumption is stronger than where filing
with the court is unusual or is generally under seal.” Amodeo II, 71 F.3d at 1050. Finally, the
court must “balance competing considerations against [the presumption of public access].”
Lugosch, 435 F.3d at 120 (quoting Amodeo II, 71 F.3d at 1050).
The documents at issue in this letter motion are “judicial documents” to which the
presumption of public access applies because they have been submitted to this Court to enable it
to adjudicate the parties’ dispute about the proper scope of discovery in this case. See id. at 119.
That presumption should not be given much weight here, however. Courts typically
conclude that the weight of the presumption of public access is strong in situations “where

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Hon. John P. Cronan
December 10, 2020
Page 2
documents are used to determine litigants’ substantive legal rights.” Id. at 121. PMC’s Motion
relates to a discovery dispute and is not dispositive of any merits issue in this case. In similar
cases involving non-dispositive motions, courts in this district have concluded that the
presumption of public access should not be accorded much weight. See, e.g., IBM, 2020 WL
6048773, at *2 (concluding that the presumption should be afforded “moderate weight” where
the requests for redaction were “submitted in connection with [a] preliminary injunction
motion—not a full trial on the merits”); In re Methyl Tertiary Butyl Ether (MTBE) Prod. Liab.
Litig., No. 07 CIV. 10470, 2013 WL 3531600, at *4 (S.D.N.Y. July 12, 2013) (“[T]he
presumption of access is weak relative to a document considered in connection with a motion
that is potentially dispositive on the merits.”). Moreover, “tradition” dictates that the
presumption should be given less weight with respect to documents containing confidential
source code information. Amodeo II, 71 F.3d at 1050. Courts routinely recognize that source
code “is often a company's most sensitive and most valuable property” and adopt “robust
protections” for source code during the discovery process. Drone Techs., Inc. v. Parrot S.A., 838
F.3d 1283, 1300 n.13 (Fed. Cir. 2016).
There is also a strong countervailing consideration weighing against public access here,
because the disclosure of information about Netflix’s source code or confidential engineering
practices would place Netflix at a significant competitive disadvantage. “[C]ourts may deny
access to records that are ‘sources of business information that might harm a litigant's
competitive standing.’” In re Parmalat Sec. Litig., 258 F.R.D. 236, 244 (S.D.N.Y. 2009)
(quoting Nixon v. Warner Commc’ns, Inc., 435 U.S. 589, 598 (1978)); see Amodeo II, 71 F.3d at
1051 (“Commercial competitors seeking an advantage over rivals need not be indulged in the
name of monitoring the courts….”). Netflix employs strict measures to maintain the
confidentiality of its source code and engineering practices and each contain trade secrets. See
Declaration of Elena Garnica at ¶ 2. If Netflix’s source code or details about Netflix’s
engineering practices were to become public, Netflix’s competitors could use that information to
improve their own products or services to better compete with Netflix. Id. at ¶ 3. Details about
the structure and organization of Netflix’s code could also be used by malicious third parties to
attack the Netflix service, placing Netflix at risk of security breaches and creating a further risk
of harming Netflix’s standing in the marketplace. Id.
Each of the documents that Netflix has requested be sealed in part contains this sort of
highly confidential, competitively sensitive information. Id. at ¶ 4. The redacted portions of the
Reply and Wong Declaration contain snippets of Netflix code and describe the structure and
functionality of that code. Courts in this district regularly grant requests to seal documents
containing similar information. See, e.g., Avocent Redmond Corp. v. Raritan Americas, Inc., No.
10 CIV. 6100 PKC, 2012 WL 3114855, at *16 (S.D.N.Y. July 31, 2012) (“The parties may file

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Hon. John P. Cronan
December 10, 2020
Page 3
the following documents under seal because they include engineering schematics, confidential
source code and confidential deliberations about future products, the disclosure of which could
unfairly allow competitors to develop competing products….”); GoSMiLE, Inc. v. Dr. Jonathan
Levine, D.M.D. P.C., 769 F.Supp.2d 630, 649-50 (S.D.N.Y. 2011) (granting motion to seal
documents containing “highly proprietary material concerning the defendants’ marketing
strategies, product development, costs and budgeting”).
Because the risk of competitive harm to Netflix greatly outweighs the minimal
presumption of public access in this situation, Netflix respectfully asks this Court to grant its
sealing motion.

Very truly yours,
/s/ Alyssa Caridis
Alyssa Caridis

Defendant's request is GRANTED. For the reasons mentioned in this letter,
the Court finds that Defendant's privacy interests outweigh the presumption
of public access to the information contained in the limited proposed
redactions.
Dkts. 140, 143.

ected to close the motions pending on

SO ORDERED.
Date: December 11, 2020
New York, New York

___________________________
JOHN P. CRONAN
United States District Judge