buySAFE, Inc. v. Google, Inc.

Filing 65

MEMORANDUM OPINION. Signed by District Judge Henry E. Hudson on 06/02/14. (kyou, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
Richmond Division

buySAFE, INC.,
Plaintiff,
Civil Action No. 3:13cv781-HEH

GOOGLE, INC.,
Defendant.
MEMORANDUM OPINION

(Protective Order)

THIS MATTER is before the Court on a Joint Motion for Protective Order (ECF

No. 48). The parties agree to all of the provisions of the Protective Order except for the
scope of the Prosecution Bar ("the Bar") as set forth in Section 2.B. of the two versions

ofthe Proposed Protective Order. (ECF No. 49, Exhibits A and B thereto).1 On May 9,
2014, Google, Inc. ("Defendant") filed a Petition ("the Petition") for a covered business

method ("CBM") review, challenging the validity of the asserted U.S. Patent 8,515,791
("the Patent") that is owned by buySAFE, Inc. ("Plaintiff). The U.S. Patent Trial and

Appeal Board ("PTAB") has not yet ruled on the Petition.2 If the Petition is granted,
1As more fully detailed in the Protective Order, the Prosecution Bar prevents anyone who gains
access in the litigation to an opposing party's "Confidential Outside Counsel Only Materials or
Source Code" from any involvement in Prosecution Activity (as defined in the Protective Order)
(1) on behalf of a party in this case, and (2) involving claims in a method, apparatus, or system
that is similar to or covered by the asserted patent or the accused product(s). The Bar is effective
for a period commencing upon receipt of such information and ending three years following the
conclusion of this case.

2The Leahy-Smith America Invents Act ("AIA"), Pub. L. No. 112-29, 125 Stat. 284 (2011)
provides for PTAB review of CBM patents upon petition.

Plaintiff may make a motion to PTAB to amend claims of the Patent. 35 U.S.C. § 326(d).
The crux of the disagreement over the scope of the Bar is whether it should extend to

post-grant review proceedings, i.e., to the CBM review. Defendant believes it should
extend to such proceedings (ECF No. 49, Exhibit A thereto, "Defendant's Bar"), and
Plaintiff argues it should not. (ECF No. 49, Exhibit B thereto, "Plaintiffs Bar"). The

parties have fully briefed the issue, and this matter is ripe for disposition. For the reasons
stated herein, and reflected in the Court's Order on May 22, 2014 (ECF No. 57), the

Court grants the Joint Motion for Protective Order and adopts Defendant's Bar.
I. Standard of Review

Defendant, as the moving party, has the burden to show as a threshold matter that

there is good cause for inclusion of a prosecution bar. In re Deutsche Bank Trust Co.
Americas, 605 F.3d 1373, 1378 (Fed. Cir. 2010) (citing Fed. R. Civ. P. 26(c)). Under
Deutsche Bank, Defendant "must show that the information designated to trigger the bar,

the scope of activities prohibited by the bar, the duration of the bar, and the subject matter
covered by the bar reasonably reflect the risk presented by the disclosure of proprietary

competitive information." 605 F.3d at 1381. "A determination of the risk of inadvertent
disclosure or competitive use does not end the inquiry... [T]he district court must

balance this risk against the potential harm to the opposing party from restrictions

imposed on that party's right to have the benefit of counsel of its choice." Id. at 1380.
"In balancing these conflicting interests the district court has broad discretion to decide
what degree of protection is required." Id.

If Defendant meets these threshold requirements, the burden shifts to Plaintiff, the
party seeking an exemption, who must show:

on a counsel-by-counsel basis: (1) that counsel's representation of the client
in matters before the PTO does not and is not likely to implicate
competitive decisionmaking related to the subject matter of the litigation so
as to give rise to a risk of inadvertent use of confidential information
learned in litigation, and (2) that the potential injury to the moving party
from restrictions imposed on its choice of litigation and prosecution counsel
outweighs the potential injury to the opposing party caused by such
inadvertent use.

Id. at 1381.

II. Analysis3
A. Good Cause for Prosecution Bar

Plaintiff argues that Defendant has not shown good cause to adopt its version of
the Bar because it has not met its burden to show that it reasonably reflects the risk of
disclosure. Deutsche Bank, 605 F.3d at 1378, 1381. Plaintiff contends that the financial

and strategic injury Plaintiff would endure under Defendant's Bar outweighs the risk to

Defendant. Plaintiff anticipates that it would be injured because it would have to retain
two sets of counsel - one to work on the case before this Court and another to address the

CBM review before PTAB. As a small company, Plaintiff emphasizes the financial cost
it would bear in obtaining additional counsel. Moreover, Plaintiff believes that

Defendant's Bar would unilaterally affect Plaintiff by creating a tactical advantage for
Defendant. Plaintiff contends that its litigation counsel would be prohibited from
3The parties rely on a number of cases outside of this Court's jurisdiction and cases within this
jurisdiction that are not directly on point. Absent any controlling cases applicable to the
circumstances at hand and given how recently the America Invents Act (which provides for the
CBM review at issue) was enacted, this Court bases its decision on the factors expressly outlined
by the Federal Circuit in Deutsche Bank, 605 F.3d at 1381.

participating in post-grant review proceedings while Defendant's litigation counsel would
be allowed to participate in this case and any post-grant review proceedings concerning
the claims at issue.

Plaintiff claims that these injuries outweigh the risk to Defendant. Specifically,

Plaintiff argues the risk to Defendant is minimal, given the nature of the reexamination in
post-grant review, where the claims can only be limited, not expanded - and any changes
must be approved by PTAB. See 35 U.S.C. § 326(d)(3) ("An amendment under this
subsection [which provides for post-grant review] may not enlarge the scope of the
claims of the patent or introduce new matter." ). Plaintiff argues that the limited nature of
post-grant review proceedings "alleviates most, if not all, of the risk" to Defendant. (PL's
Mem. Supp. Mot. Protective Order, 2, ECF No. 51).

This Court disagrees, and finds that Defendant has met its burden that its proposed
"bar reasonably reflect[s] the risk presented." Deutsche Bank, 605 F.3d at 1381. Plaintiff
has access to Defendant's confidential information and source code, which Defendant

describes as the "crown jewels" of Google, Inc., by virtue of the litigation before this
Court. (Def.'s Mem. Supp. Mot. Protective Order, 10, ECF No. 50). If Defendant's
petition for CBM review is granted, there is a significant risk that Plaintiff will make a
motion to PTAB to amend the claims of its Patent "to distinguish them from the prior art

in a manner that is informed by its knowledge of [Defendant's] highly confidential
information and source code gleaned in this litigation." (Id. at 6). Plaintiff contends that

Defendant has not clearly defined the potential misuse of Defendant's source code.
Defendant's references to potential misuse are not vague. Rather, the potential misuse is

obvious where Plaintiff has access to valuable and confidential source code, and could

use such information to create a tactical advantage in this case.

Plaintiffs possible injuries are minimal in comparison to the risk to Defendant.
The injuries are minimized because Defendant's Bar applies only to Plaintiffs counsel
that have seen Defendant's confidential material and source code. Specifically,

Defendant's Bar prevents Plaintiffs litigation counsel, who have access to Defendant's
confidential information and source code, from "providing any advice or counseling

regarding, or participating in, the drafting or amending claims for any patent application,

reissue application, reexamination, or post grant review proceedings." (ECF No. 49,
Exhibit A thereto). Accordingly, Plaintiff does not necessarily need to hire separate
counsel. Defendant's Bar allows Plaintiffs litigation counsel - who have not and agree
not to review Defendant's confidential information or source code - to fully participate in

the CBM review proceeding, including motions for claim amendments.

By contrast, the risk to Defendant is significant for the reasons explained supra especially in light of Plaintiff s alleged predisposition to file serial lawsuits against
Defendant on newly-issued patent claims. Thus, this Court exercises its "broad
discretion," and finds that Defendant's Bar reasonably reflects the risk. Deutsche Bank,
605F.3dat 1380, 1381.

B. Exemption to Prosecution Bar

Having found good cause to support Defendant's Bar, the Court now considers
whether Plaintiff has established that it is entitled to an exemption on a counsel-by
counsel basis. Deutsche Bank, 605 F.3d at 1381.

The Court finds that Plaintiff has not satisfied the first prong justifying an

exemption because Plaintiffs "counsel's representation of the client in matters before the

PTO does [implicate or is] likely to implicate competitive decisionmaking related to the
subject matter of the litigation so as to give rise to a risk of inadvertent use of
confidential information learned in litigation." Id. The Federal Circuit explains that

"competitive decision-makers" may be those who "are more substantially engaged with
prosecution." Deutsche Bank, 605 F.3d at 1380. Here, Plaintiff does not dispute that its
litigation counsel will be engaged in "competitive decision-making" if they participate in

post-grant review proceedings. Moreover, it is evident that Plaintiffs counsel's role in
the CBM review proceeding will involve many of the activities that the Federal Circuit
has identified as implicating the sort of activity that is likely to implicate competitive

decisionmaking.4 Thus, the likely implication ofcompetitive decisionmaking weighs in
favor of denying an exemption.

4The Federal Circuit provided several examples of competitive decisionmaking:
Such involvement may include obtaining disclosure materials for new inventions
and inventions under development, investigating prior art relating to those
inventions, making strategic decisions on the type and scope of patent protection
that might be available or worth pursuing for such inventions, writing, reviewing,
or approving new applications or continuations-in-part of applications to cover
those inventions, or strategically amending or surrendering claim scope during
prosecution. For these attorneys, competitive decisionmaking may be a regular
part of their representation, and the opportunity to control the content of patent
applications and the direction and scope of protection sought in those applications
may be significant. The risk of inadvertent disclosure of competitive information
learned during litigation is therefore much greater for such attorneys. Such
attorneys would not likely be properly exempted from a patent prosecution bar.
Deutsche Bank, 605 F.3d at 1380.

For the reasons discussed supra, the Court also finds Plaintiff has not met the

requirements of the second prong because Plaintiff has not shown "that the potential

injury to [Plaintiff] from restrictions imposed on its choice of litigation and prosecution
counsel [is not outweighed by] the potential injury to [Defendant] caused by such
inadvertent use." Deutsche Bank, 605 F.3d at 1381. Therefore, the Court denies Plaintiff

an exemption to Defendant's Bar at this juncture.
III. Conclusion

For these reasons, the Court grants the Joint Motion for Protective Order and

adopts Defendant's version of the Prosecution Bar as seen in Section 2.B. of the Proposed
Protective Order. Accordingly, Defendant's Proposed Protective Order shall govern this
case.

^

/s/

Henry E. Hudson
United States District Judge

Date: Joh«. 2, 2o\H
Richmond, Virginia