Bianco MD vs Globus Medical Inc
Filing
312
MEMORANDUM OPINION AND ORDER. Signed by Judge William C. Bryson on 7/14/2014. (ch, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
MARSHALL DIVISION
SABATINO BIANCO, M.D.,
Plaintiff,
v.
GLOBUS MEDICAL, INC.,
Defendant.
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Case No. 2:12-CV-00147-WCB
MEMORANDUM OPINION AND ORDER
Before the Court is the parties’ Joint Motion to Seal Portions of the Trial Transcript (Dkt.
No. 285). The motion is GRANTED IN PART and DENIED IN PART.
As a general matter, sealing judicial records, including the transcript of a trial or portions
of the trial transcript, is contrary to the principle that judicial proceedings in this country are to
be conducted in public. The Supreme Court has recognized the existence of a “general right to
inspect and copy public records and documents, including judicial records and documents.”
Nixon v. Warner Commc’ns, Inc., 435 U.S. 589, 597 (1978); see also In re Violation of Rule
28(d), 635 F.3d 1352, 1356 (Fed. Cir. 2011); SEC v. Van Waeyenberghe, 990 F.2d 845, 848 (5th
Cir. 1993). And the Fifth Circuit, like other courts, has acknowledged that there is “a strong
presumption in favor of a common law right of public access to court proceedings.” United
States v. Holy Land Found. for Relief & Dev., 624 F.3d 685, 690 (5th Cir. 2010); In re Violation
of Rule 28(d), 635 F.3d at 1356. For that reason, the party seeking to seal portions of the
transcript bears a heavy burden of showing that a sealing order is necessary to protect important
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countervailing values, and “[o]nly the most compelling reasons can justify non-disclosure of
judicial records.” In re Knoxville News-Sentinel Co., 723 F.2d 470, 476 (6th Cir. 1983).
To be sure, the “right to inspect and copy judicial records is not absolute.” Nixon, 435
U.S. at 598. The presumption in favor of public access to court records can therefore be
overcome in certain instances. For example, courts have denied public access to court records
when necessary to ensure that those records “are not ‘used to gratify private spite or promote
public scandal,’” or to ensure that court records are not used “as sources of business information
that might harm a litigant’s competitive standing.” Id.
The decision whether to allow public access to court records is left to the “sound
discretion of the trial court . . . to be exercised in light of the relevant facts and circumstances of
the particular case.” Nixon, 435 U.S. at 599. The exercise of that discretion is not unguided,
however. “In determining whether to restrict the public’s access to court documents, the court
must ‘weigh[] the interests advanced by the parties in light of the public interest and the duty of
the courts.’” In re Violation of Rule 28(d), 635 F.3d at 1357 (quoting Nixon, 435 U.S. at 602).
And in making a decision as to whether to limit public access to court records, a judge must be
cognizant of the fact that “[p]ublic access [to judicial records] serves to promote trustworthiness
of the judicial process, to curb judicial abuses, and to provide the public with a more complete
understanding of the judicial system, including a better perception of its fairness.”
Van
Waeyenberghe, 990 F.2d at 850 (alteration in original); see also id. (“The real focus of our
inquiry is on the rights of the public in maintaining open records and the ‘check[] on the integrity
of the system.’” (quoting Wilson v. Am. Motors Corp., 759 F.2d 1568, 1571 (11th Cir. 1985))).
Accordingly, courts have held that a district judge’s “discretion to seal the record of judicial
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proceedings is to be exercised charily,” Van Waeyenberghe, 990 F.2d at 848, and have directed
that the “decision must be made in light of the ‘strong presumption that all trial proceedings
should be subject to scrutiny by the public.’” Holy Land, 624 F.3d at 690.
The party seeking to seal court documents, including transcripts, has the burden of
establishing that the presumption of public access to court records is overcome. LEAP Sys., Inc.
v. MoneyTrax, Inc., 638 F.3d 216, 221-22 (3d Cir. 2011); Kamakana v. City & Cnty. of
Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006); Va. Dep’t of State Police v. Wash. Post, 386
F.3d 567, 575 (4th Cir. 2004); Bankhead v. Gregg Cnty., 2013 WL 124114, at *2 (E.D. Tex. Jan.
9, 2013) (citing Torres-Montalvo v. Keith, 2011 WL 5023271, at *1 (S.D. Tex. Oct. 17, 2011)).
The moving party “can overcome the strong presumption of access by providing ‘sufficiently
compelling reasons’ that override the public policies favoring disclosure.”
Apple Inc. v.
Samsung Elecs. Co., 727 F.3d 1214, 1221 (Fed. Cir. 2013). That is, the moving party “must
articulate compelling reasons supported by specific factual findings that outweigh the general
history of access and the public policies favoring disclosure, such as the public interest in
understanding the judicial process.” Id.; see also In re Terra Int’l, Inc., 134 F.3d 302, 306 (5th
Cir. 1998) (district court’s entry of a protective order was “unsupported by a ‘particular and
specific demonstration of fact’” where movant made only conclusory allegations of harm).
In this case, the parties have moved to seal significant portions of the trial transcript. The
parties characterize the portions of the transcript that they wish to have sealed as “narrowly
tailored excerpts.” The Court, however, has carefully reviewed each of the nearly 100 portions
of the transcript that the parties wish to have sealed, many of which include multiple pages, and
is not persuaded that the excerpts are “narrowly tailored.”
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The materials identified by the parties fall into several general categories. Dr. Bianco’s
requests for sealing relate to (1) the details of the drawings that he provided to Globus in June
2007, and (2) information concerning Dr. Bianco’s meeting with representatives of Biomet,
another medical device manufacturer. Globus’s requests for sealing relate to (1) the profits and
profit margins on the Caliber and Rise lines of products, and (2) the royalty rates it paid to
consulting surgeons who were members of Globus design teams on various projects.
In their joint motion, the parties have provided only a barebones explanation for why they
believe sealing is necessary. The unelaborated characterizations of the materials they seek to
have sealed read as follows: “Globus royalty rates, profit margins,” “Globus royalty rates,”
“Globus royalty rates and margins,” “Globus royalty rates and profit margins,” “Dr. Bianco’s
testimony relating to his Invention Disclosure and his presentation to Biomet,” “Mr. Rhoda’s
testimony relating to Dr. Bianco’s Invention Disclosure,” “Dr. McMillin’s testimony relating to
Dr. Bianco’s Invention Disclosure,” “Mr. Harris’s testimony relating to Dr. Bianco’s Invention
Disclosure,” “Mr. Ferreira’s Deposition Transcript,” “Dr. Cheng’s testimony relating to Dr.
Bianco’s Invention Disclosure,” and “Mr. Iott’s testimony relating to Dr. Bianco’s Invention
Disclosure.”
The absence of any elaboration could, by itself, be deemed a failure to “articulate
compelling reasons supported by specific factual findings that outweigh the general history of
access and the public policies favoring disclosure, such as the public interest in understanding
the judicial process.” Apple Inc. v. Samsung Elecs. Co., 727 F.3d at 1221. However, the Court
notes that in earlier pleadings, the parties have provided somewhat more detailed arguments as to
why the categories of evidence for which they now request sealing should be protected from
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disclosure. See Dkt. No. 258 (Dr. Bianco’s Response to Show Cause Order); Dkt. No. 259
(Globus Medical Inc.’s Response to the Court’s Show Cause Order). Those arguments pertain to
pleadings and orders rather than to trial testimony, and the parties have not re-presented those
arguments in the currently pending motion. The Court, however, assumes that the parties
intended those arguments to be applicable to the motion to seal portions of the trial transcript.
The Court therefore will treat those arguments as if they were incorporated by reference in the
current motion.
In those earlier pleadings, Dr. Bianco argued that the details of his invention disclosure to
Globus should be sealed because the jury’s verdict establishes that the disclosure is a trade
secret. Trade secrets, Dr. Bianco argued, are among those materials that courts have been
willing to protect from public disclosure by sealing court records. Dkt. No. 258, at 1-2. Globus
argued that the public disclosure of nonpublic financial information related to its Caliber,
Caliber-L, and Rise products—particularly the profits and profit margins on those products—
would competitively harm Globus. Dkt. No. 259, at 2. And, according to Globus, release of
information about Globus’s royalty agreements with design team doctors “would grant Globus’s
competitors access as to details concerning the royalty percentages agreed to by Globus.” Id. at
3.
For the reasons given below, the Court concludes sealing is appropriate for certain
portions of the transcript revealing details of Dr. Bianco’s invention disclosure that are not
disclosed elsewhere in the public record. Likewise, sealing is appropriate for very limited
portions of the transcript relating to the nature of Dr. Bianco’s presentation to Biomet. However,
the Court concludes that sealing is not appropriate for the transcript excerpts relating to the
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royalty rates for Globus’s design team doctors and to the profit margins for Globus’s Caliber and
Rise line of products.
1. At the outset, the Court notes that the force of the parties’ request for sealing is
undercut by the fact that they have failed to take appropriate measures to protect the material that
they now wish to have sealed.
The trial in this case was held in open court; no request to close the courtroom was made
at any time during the trial. Nor did the parties alert the Court at the time of trial that they
objected to public disclosure of certain portions of the trial testimony. After the trial, in the
course of a colloquy relating to the issue of sealing certain pleadings and orders, the Court
pointed out that the trial had taken place in open court and the testimony at trial had all come in
without any limitation on its public availability. The parties responded that they had kept track
of the identity of those persons entering and leaving the courtroom, and that they were therefore
confident that there was no significant risk that unknown third persons had obtained access to the
sensitive information that was revealed in open court during the trial. The Court at that time
expressed skepticism about the practical or legal effectiveness of such an informal method of
protecting sensitive information and raised the question whether the parties had waived any right
to have the trial proceedings sealed by not moving to close the courtroom during the presentation
of sensitive information or requesting other protective measures.
Following that colloquy, the Court held an evidentiary hearing on future royalties. Once
again, the parties did not ask to close the courtroom or to have sensitive materials otherwise
protected, even though there was testimony at that hearing about the royalty rates paid to
surgeons on Globus’s design teams. Even if Globus can be excused for not having taken
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measures to close the trial proceedings when sensitive material was being discussed, it is difficult
to understand why Globus would not seek some form of protection for the same material when it
elicited that information from its own witnesses at the evidentiary hearing, which occurred after
the problem of Globus’s failure to seek courtroom closure during trial had been raised by the
Court in connection with Globus’s earlier sealing request.
Because the Court did not flag this issue for the parties prior to trial, the Court will not
treat the parties’ lax approach to the issue of protecting sensitive testimony from public
disclosure as a waiver of their right now to seek sealing of the trial testimony. However, the
Court regards the parties’ failure to more actively protect the information elicited from witnesses
in open court as an indication that the parties do not regard the materials at issue as highly
sensitive.
2. A second problem with the parties’ sealing request is that the substance of much of the
information they seek to protect has already been publicly disclosed, either through filings that
have not been sealed or in portions of the trial transcript that the parties have not moved to have
sealed. For example, while Globus has requested sealing of various portions of the transcript
dealing with the profits Globus has made on the Caliber and Rise line of products, it has not
moved to seal a number of references that provide profit-related information. Those include
allusions to Globus’s royalty base profits of more than $100 million on Caliber and Rise (1/13/14
PM Tr. 10:6-12, 22:16-19; 1/15/14 AM Tr. 79:22-80:4), and net profits of $38.5 million (1/15/14
AM Tr. 46:6-12, 61:21-62-7, 77:17). In light of the public disclosure of those numbers, the
Court discerns no protectable interest in the total sales of the Caliber and Rise products or the
marginal profit percentages on those products, both of which Globus has sought to have sealed.
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Moreover, Globus is a publicly traded company, and its sales and earnings are publicly
reported. Because testimony at trial that Globus has not sought to have sealed reveals that the
Caliber line of products accounted for between 10 and 16 percent of Globus’s sales, see 1/15/14
AM Tr. 78:20-24, 170:24-171:21, it would be a simple matter to calculate the approximate sales
volume for the Caliber devices during at least 2012-2013. For that reason as well, sealing that
information would not be justified.
3. With respect to Dr. Bianco’s sealing requests, the Court finds that the general nature
of the drawings has been revealed in various public pleadings and orders. Accordingly, even
though the jury found that the drawings are protected trade secrets, not all the details of the
drawings are entitled to continued protection through a sealing order. Based on the jury’s verdict
as to the trade-secret status of the drawings, the Court is prepared to direct the sealing of portions
of the trial testimony that consist of more detailed accounts of the drawings and reveal features
that were not otherwise made public. The protection will not be extended to all the portions of
the transcript requested by Dr. Bianco, however, because many of the transcript excerpts do not
reveal any more than is already in the public record.
For example, the fact that Dr. Bianco regarded his drawings as depicting an adjustable
interbody spacer with a scissor-jack mechanism has been a matter of public record since early in
the case. See, e.g., Dkt. No. 13, at 5; Dkt. No. 36, at 2; Dkt. No. 37, at 3; Dkt. No. 45, at 2. In
addition, those facts were discussed by the parties in opening statements and closing arguments.
See, e.g., 1/13/14 PM Tr. 15:14-17:3, 25:14-27:20, 29:12-30:23; 1/17/14 AM Tr. 138:11-23,
162:6-9, 163:5-10, 167:15-168:16. Nonetheless, Dr. Bianco has not sought to seal those portions
of the trial transcript. Similarly, references to the round markers that are seen on some versions
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of Dr. Bianco’s drawings are found in portions of the trial transcript that the parties have not
sought to seal. The Court therefore concludes that those aspects of the invention disclosure are
not entitled to protection by sealing the associated materials that Dr. Bianco requests be sealed.
Certain other features of the invention disclosure, however, were not revealed in public portions
of the record, so far as the Court is aware. The jury’s finding that Dr. Bianco’s drawings
constitute trade secrets is a sufficient basis for the Court to find that a clear showing has been
made that the previously undisclosed aspects of the drawings are entitled to protection.
Accordingly, the Court will direct that the following portions of the transcript remain sealed
because they disclose details about Dr. Bianco’s drawings that are not otherwise in the public
record:
1/13/14 PM Tr.: 78:15-83:18; 99:3-21; 133:14-24.
1/14/14 AM Tr.: 178:18-185:14
1/14/14 PM Tr.:
72:3-73:11; 74:24-78:5; 120:15-121:1; 128:7-135:22, 150:3-151:1;
151:5-152:10; 154:6-155:2.
1/15/14 PM Tr.: 64:4-23; 140:7-141:17.
1/16/15 AM Tr.: 191:23-192:21.
1/16/14 PM Tr.: 5:24-6:24; 12:12-16:6.
1/17/14 AM Tr.: 59:9-16; 59:25-60:18.
4. Many of Globus’s requests to seal particular portions of the transcript relate to the
royalty rates paid to physicians on Globus’s design teams for the Caliber and Rise products, as
well as other products. The Court, however, is not persuaded that Globus has made a sufficiently
compelling showing that those royalty rates are entitled to protection from disclosure. The
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evidence at trial showed that Globus’s royalty rates for design team physicians are standard in
the industry (1/16/14 PM Tr. 144:6-7), and Globus’s standard rate is disclosed in at least one
portion of the transcript for which Globus does not request sealing (1/16/14 PM Tr. 170:6-10).
Moreover, Andy Iott, Globus’s senior vice-president for product development, testified at
the evidentiary hearing on future royalties that it was his understanding that the royalty rates paid
by Globus were typical of the rates paid to design team physicians by other companies in the
field—rates that were not publicly disclosed by those companies but were generally known.
5/13/14 Tr. 106:14-107:6. Thus, the Court concludes that the testimony about the royalty rates to
which Globus points would not reveal highly sensitive materials that would not otherwise be
publicly known.
In the course of listing the portions of the trial transcript relating to its royalty rates,
Globus includes references to a few royalty rates that were higher than the rates typically paid to
design team physicians. Globus, however, has made no separate argument, much less introduced
any evidence, to suggest that those enhanced royalty rates constitute highly sensitive commercial
information that deserves the special protection accorded by a sealing order. The Court therefore
will not order those portions of the transcript sealed.
5. Finally, the Court finds no merit in most of Dr. Bianco’s requests to seal certain
excerpts of the transcript relating to his 2013 presentation to Biomet. Much of the testimony to
which Dr. Bianco points did not reveal confidential details of his presentation to Biomet, and
thus revealed no trade secret or other protected information.
Moreover, the general
circumstances relating to Dr. Bianco’s presentation to Biomet were revealed in both the opening
statement and the closing argument of Globus, which Dr. Bianco has not sought to seal. See
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1/13/14 PM Tr. 42:22-43:21; 1/17/14 AM Tr. 165:8-18. The portions of the testimony about Dr.
Bianco’s presentation to Biomet that do not deal with the specific subject matter of the
presentation will therefore not be sealed. However, the Court will direct the sealing of the
portions of the transcript that allude to the contents of Dr. Bianco’s disclosure to Biomet and
disclose the nature of the device that he described to Biomet in his proposal. Accordingly, the
Court will deny the request to seal the materials relating to Dr. Bianco’s presentation to Biomet
with the exception of the following excerpts, which the Court will direct to be sealed:
1/16/14 AM Tr.: 146:15-18; 149:18-23.
1/16/14 PM Tr.: 22:2-29:23.
The Court will stay the effectiveness of this order for 10 days in the event that the parties
wish to seek modification, reconsideration, or appellate review of the Court’s decision on this
matter.
IT IS SO ORDERED.
SIGNED this 14th day of July, 2014.
_____________________________
WILLIAM C. BRYSON
UNITED STATES CIRCUIT JUDGE
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