Intellectual Ventures II LLC v. FedEx Corporation et al

Filing 66

MEMORANDUM OPINION AND ORDER re #59 Joint MOTION for Protective Order (With Disputed Provisions Noted) filed by Intellectual Ventures II LLC. Parties are ORDERED to submit a final proposed Protective Order within three days of this order. Signed by Judge Rodney Gilstrap on 4/5/2017. (slo, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
MARSHALL DIVISION

INTELLECTUAL VENTURES II LLC,

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Plaintiff,
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v.
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FEDEX CORP., FEDERAL EXPRESS
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CORP., FEDEX GROUND PACKAGE
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SYSTEM, INC., FEDEX FREIGHT, INC.,
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FEDEX CUSTOM CRITICAL, INC., FEDEX §
OFFICE and PRINT SERVICES, INC., AND §
GENCO DISTRIBUTION SYSTEM, INC., §
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Defendants.
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CASE NO. 2:16-cv-980-JRG

MEMORANDUM OPINION AND ORDER
Before the Court is a Joint Motion for a Protective Order (Dkt. No. 59).
I.

BACKGROUND
On August 31, 2016, Plaintiff Intellectual Ventures II LLC filed a Complaint against

Defendants FedEx Corporation, Federal Express Corporation, FedEx Ground Package System,
Inc., FedEx Freight, Inc., FedEx Custom Critical, Inc., FedEx Office and Print Services, Inc., and
GENCO Distribution System, Inc. (collectively, “FedEx” or “Defendants”). (Dkt. No. 1.) Plaintiff
alleges that Defendants infringe U.S. Patent Nos. 6,633,900; 6,909,356; 7,199,715; 8,494,581; and
9,047,586 (collectively, the “Patents-in-Suit”). (Id.) Defendants have also requested inter partes
review (“IPR”) for each of the Patents-in-Suit.1 No IPRs have been instituted at the time of this
opinion.

1

(Dkt. No. 59 at 7.); see also FedEx Corp. v. Intellectual Ventures II, LLC, Petition for Inter Partes Review, IPR201700743, Paper No. 2 (Jan 24, 2017); FedEx Corp. v. Intellectual Ventures II, LLC and Gula Consulting LLC, Petition
for Inter Partes Review, IPR2017-00750, Paper No. 2 (Jan 23, 2017); FedEx Corp. v. Intellectual Ventures II, LLC
and Callahan Cellular LLC, Petition for Inter Partes Review, IPR2017-00787, Paper No. 2 (Jan 27, 2017); FedEx

On February 21, 2017, the parties filed the joint motion now before the Court. The dispute
between the parties is a proposal to exclude certain experts and consultants from participating in
post grant review proceedings under the prosecution bar in the Parties’ proposed protective order.
(Dkt. No. 59 at 2.)
II.

LEGAL STANDARD
A party seeking a protective order must demonstrate “good cause” for its issuance. FED.

R. CIV. P. 26(c). “The same is true for a party seeking to include in a protective order a provision
effecting a patent prosecution bar.” In re Deutsche Bank Trust Co. Americas, 605 F.3d 1373, 1378
(Fed. Cir. 2010).2 In assessing the scope of such a bar, a court first (1) determines whether there
is an “‘unacceptable opportunity for inadvertent disclosure’” of confidential information to an
individual involved in “competitive decisionmaking” with his or her client and then (2) “balance[s]
this risk against the potential harm to the opposing party . . . .” Id. at 1378, 1380 (quoting U.S.
Steel Corp. v. United States, 730 F.2d 1465 (Fed. Cir. 1984)); see also Toshiba Samsung Storage
Tech. Korea Corp. v. LG Elecs., Inc., No. CV 15-691-LPS-CJB, 2016 WL 447794, at *1 (D. Del.
Feb. 4, 2016). “In balancing these conflicting interests the district court has broad discretion to
decide what degree of protection is required.” In re Deutsche Bank, 605 F.3d at 1380.

Corp. v. Intellectual Ventures II, LLC and Callahan Cellular LLC, Petition for Inter Partes Review, IPR2017-00729,
Paper No. 2 (Jan. 19, 2017); FedEx Corp. v. Intellectual Ventures II, LLC and OL Security Limited Liability Company,
Petition for Inter Partes Review, IPR2017-00859, Paper No. 2 (Feb. 7, 2017).
2
Although Fifth Circuit law would normally govern issues involving an interpretation of the Federal Rules of Civil
Procedure, “Federal Circuit law applies to discovery matters if the determination implicates an issue of substantive
patent law,” including the scope of a patent prosecution bar. In re Deutsche Bank, 605 F.3d at 1377.

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III.

DISCUSSION
The Court begins by considering whether permitting experts and consultants to participate

in this litigation and related PTO proceedings creates an “unacceptable opportunity for inadvertent
disclosure” of confidential information based on Deutsche Bank.3
Defendants argue that Plaintiff’s experts may use knowledge acquired in this litigation to
“advis[e] counsel on drafting claim amendments” in the IPRs that have been filed. (Dkt. No. 59
at 7.) The Court is not persuaded that this is an “unacceptable” risk, particularly where the parties
already agree that outside counsel for both parties may overlap between this litigation and related
PTO proceedings. Even if some risk of inadvertent disclosure in hypothetical IPR proceedings
were considered to be present here, Defendants have not demonstrated that such a risk is
substantial. See, e.g., Two-Way Media Ltd. v. Comcast Cable Commc'ns, LLC, Civil Action No.
14-1006-RGA, Civil Action No. 14-1212-RGA, 2015 WL 7257915, at *2 (D. Del. 2015)
(explaining that “[i]nvolvement in post-grant proceedings does not raise the same risk of
competitive misuse as does involvement in prosecution” because in post-grant proceedings the
PTO is assessing existing claims that may only be narrowed such that there is “little risk that
confidential information learned in litigation will be competitively used to draft claims that read
on [d]efendants’ products”); Ameranth, Inc. v. Pizza Hut, Inc., No. 3:11-CV-01810-JLS, 2012 WL
528248, at *6 (S.D. Cal. 2012) (concluding that “a review of cases directly discussing a
prosecution bar applied to reexamination finds near unanimous support against extending the bar
to cover reexamination” and collecting cases); Document Generation Corp. v. Allscripts, LLC, No.
CIV A 6:08-CV-479, 2009 WL 1766096, at *2 (E.D. Tex. 2009) (noting that fears a plaintiff might

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While Deutsche Bank involved the application of a prosecution bar to lawyers, not experts or consultants, and
involved patent prosecution, rather than IPR and other post grant proceedings, the standards set forth there are
instructive and guide the Court’s analysis.

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use confidential information to “enlarge the scope of the initial patent” in reexamination were
“largely misplaced”); Toshiba Samsung, No. CV 15-691-LPS-CJB, 2016 WL 447794, at *2.
Instead, Defendants have argued that such risk “is too great” without support or citation to legal
authority. (Dkt. No. 59 at 6.)
By contrast, the burden imposed on Plaintiff by Defendants’ proposal is substantial.
Plaintiff would be required to retain one set of experts for this case and another set of experts for
any future PTO proceedings related to this case. Defendants argue, however, that Plaintiff faces
“no prejudice” in this circumstance because “there are ample experts available in the field.” (Dkt.
No. 59 at 7.) However, the burden imposed on Plaintiff here arises from the cost of hiring two sets
of experts and the additional expense related to counsels’ time in familiarizing both sets of experts
with the same facts.

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In light of these circumstances, the Court is not persuaded that good cause exists for

Defendants’ proposed prosecution bar. Having considered the motion, the Court has determined
that it will not restrict experts from participating in post-grant or reexamination proceedings related
to this case, absent some agreement between the parties. The parties are therefore ORDERED to
submit a final proposed Protective Order incorporating the above decision. Such should be
submitted within three days of this order.

SIGNED this 19th day of December, 2011.
So ORDERED and SIGNED this 5th day of April, 2017.

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RODNEY GILSTRAP
UNITED STATES DISTRICT JUDGE

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