Milwaukee Electric Tool Corporation et al v. Chervon North America Inc
Filing
180
ORDER signed by Judge J.P. Stadtmueller on 4/21/2017 GRANTING 166 Defendant's Expedited Motion for Protective Order. (cc: all counsel) (jm)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
MILWAUKEE ELECTRIC TOOL
CORPORATION, METCO BATTERY
TECHNOLOGIES LLC, AC (MACAO
COMMERCIAL OFFSHORE) LIMITED,
and TECHTRONIC INDUSTRIES CO.
LTD.,
Case No. 14-CV-1289-JPS
Plaintiffs,
v.
CHERVON NORTH AMERICA INC.,
ORDER
Defendant.
On April 4, 2017, Defendant Chervon North America Inc. (“Chervon”)
filed an expedited motion under Civil Local Rule 7(h) for a protective order
barring Plaintiffs from disclosing Chervon’s “highly sensitive technical and
financial information” to two individuals who are employed as in-house
counsel to a subsidiary of Plaintiff Techtronic Industries Co. Ltd.
(“Techtronic”). (Docket #166). These two individuals, Chris Agnew
(“Agnew”) and Ben Alley (“Alley”) work for Techtronic Industries North
America, Inc. and One World Technologies, Inc., respectively. Agnew is the
Global Director of Intellectual Property for his company, while Alley is a
patent attorney at One World Technologies, Inc. (Docket #167-2 at 1).
Plaintiffs have designated them to receive confidential information under the
Court’s protective order in this case (Docket #39), and Chervon objects,
arguing that disclosing such information to Agnew and Alley “presents a
serious and unjustifiable risk of inadvertent disclosure as well as business
or economic harm to Chervon and nonparty Chervon entities who have
produced confidential documents and information in this litigation at
Plaintiffs’ request.” (Docket #166 at 1).
A protective order can issue to protect a party from undue burden or
expense by prohibiting disclosure of discovery materials to certain persons.
See Fed. R. Civ. P. 26(c)(1); U.S. Steel Corp. v. United States, 730 F.2d 1465,
1468 (Fed. Cir. 1984). The party seeking the protective order must establish
good cause for the relief it seeks. Fed. R. Civ. P. 26(c)(1); Wiggins v. Burge, 173
F.R.D. 226, 228 (N.D. Ill. 1997). To show good cause, the party must
demonstrate a particular need for protection; “[b]road allegations of harm,
unsubstantiated by specific examples or articulated reasons, do not satisfy the
Rule 26(c) test.” Cipollone v. Liggett Group, Inc., 785 F.2d 1108, 1121 (3d Cir.
1986). The district court has discretion to decide when a protective order is
appropriate and what degree of protection is required. Seattle Times Co. v.
Rhinehart, 467 U.S. 20, 36 (1984).
“A determination of whether a trial lawyer should be denied access to
information under a protective order because of his additional role in patent
prosecution” is a matter unique to patent law, and so the guidance of the
Federal Circuit is controlling. In re Deutsche Bank Trust Co. Americas, 605 F.3d
1373, 1377 (Fed. Cir. 2010).1 The Federal Circuit has held that whether
disclosure of information under a protective order to a certain person
represents an unreasonable risk of inadvertent disclosure must be decided on
a counsel-by-counsel basis. Id. at 1378. The key inquiry is whether counsel is
involved in the company’s “competitive decisionmaking,” which can include
1
Deutsche Bank dealt with a patent prosecution bar, but it has been
analogized to other contexts, Prolitec Inc. v. ScentAir Techs., Inc., 945 F. Supp. 2d
1007, 1010 (E.D. Wis. 2013), and the Court finds that its analysis fits the problem
presented here.
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advising a client about pricing, product design, or other matters based on
similar knowledge known about a competitor. Id.
In patent cases, the competitive decisionmaking concern is implicated
when counsel not only advises the corporation about the present suit but also
aids the corporation in research and patent prosecution. Id. at 1379. However,
it is not the case that every lawyer involved in such matters cannot also
participate as trial counsel. Id. “The facts, not the category must inform the
result.” Id.; In re Dell Inc., 498 F. App’x 40, 43 (Fed. Cir. 2012) (observing that
the Federal Circuit has “repeatedly rejected denial of access on. . .general
assumptions” or “categorical presumptions”). On the one hand, exclusion
probably should not apply to an attorney who does ancillary patent-related
work or engages in “high-altitude oversight” without a “significant role” in
actually crafting patent applications or advising clients on what research or
production to undertake. Deutsche Bank, 605 F.3d at 1379–80. In such cases,
the attorney likely will not rely on the confidential information learned in the
suit to gain competitive advantage for his company. Id.
Conversely, the rule sensibly applies to attorneys who “obtai[n]
disclosure materials for new inventions and inventions under development,
investigat[e] prior art relating to those inventions, mak[e] strategic decisions
on the type and scope of patent protection that might be available or worth
pursuing for such inventions, writ[e], revie[w], or approv[e] new applications
or continuations-in-part of applications to cover those inventions, or
strategically amen[d] or surrende[r] claim scope during prosecution.” Id. at
1380. These duties implicate competitive decisionmaking on behalf of the
corporation, and it is more likely that an attorney who gained confidential
information in the course of an infringement suit would be influenced by that
information in his other tasks. Id. Furthermore, it is important to consider not
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only the attorney’s duties but also the confidential information at issue in the
infringement suit; if it is merely financial data or business information, it
might not be relevant to competitive decisionmaking about patents, but if it
is information related to inventions and technology being developed, the
danger is greater. Id. at 1381.
In the end, the scope of responsibilities which lead a court to conclude
that the risk of inadvertent disclosure is too high is tethered to the particular
individual in question. See id. at 1380. And, moreover, even if counsel
represents some risk of inadvertent disclosure, the danger must be equitably
balanced against the corporation’s right to have counsel of its choosing. Id.
Against this backdrop, the Court assesses Chervon’s specific concerns
about disclosure of information to Agnew and Alley. First, Chervon contends
that these two cannot properly be designated to receive confidential
information under the protective order, which only permits designation of inhouse counsel for a party. (Docket #166 at 1); (Docket #39 at 5); Mixing Equip.
Co. v. Innova-Tech, Inc., Civ. A. No. 85–0535, 1986 WL 9264, at *1 (E.D. Pa.
Aug. 20, 1986) (upholding decision to deny in-house counsel of plaintiff’s
parent corporation access to confidential information because protective
order only contemplated designation of in-house counsel of a party).2
Plaintiffs acknowledge that Agnew and Alley are not officially employed by
any party to the case, but argue that (1) being employed by wholly owned
subsidiaries of Techtronic is sufficient because of the control Techtronic
2
Plaintiffs say that the Court cannot rely on Mixing Equipment because it is
unpublished and was issued in 1986. (Docket #175 at 2 n.2). It is true that the
Seventh Circuit prohibits citation of non-precedential orders issued prior to 2007.
7th Cir. R. 32.1(d). But the rule only applies to the Seventh Circuit’s orders, not
those of other courts. See id. This Court can consider Mixing Equipment to the extent
it is persuasive.
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enjoys over the subsidiaries and (2) Agnew and Alley’s responsibilities
include serving as in-house counsel to Techtronic, albeit apparently
informally. (Docket #175 at 1–2). Chervon counters that the language of the
protective order leaves no room for Plaintiffs’ interpretation. (Docket #166 at
1–2).
Second, Chervon complains that Plaintiffs have provided only
conclusory descriptions of Agnew and Alley’s job responsibilities, despite its
requests for greater specificity, thereby depriving Chervon of a meaningful
opportunity to assess whether the men could compromise Chervon’s
confidential information because of their involvement in prosecuting
Plaintiffs’ patents, designing or developing Plaintiffs’ products, licensing and
enforcing Plaintiffs’ patents, or advising other competitive decisionmakers
about such matters. Id. at 2. Plaintiffs say that they complied with the
requirements of the protective order in giving the job descriptions for these
two attorneys. (Docket #175 at 2).
Finally, Chervon believes that based on the information it has,
disclosure of confidential information to Agnew and Alley would cause them
business or economic harm. (Docket #166 at 2–3). Specifically, in his role,
Agnew engages in “oversight of the intellectual property strategy for
Techtronic Industries North America, Inc., and management of intellectual
property related matters for the business.” (Docket #167-2 at 1). Alley
“perform[s] patent clearance, manag[es] the internal patent portfolio, and
manag[es] and counsel[s] the business teams regarding patent and patent
litigation matters for One World Technologies, Inc.” Id. Because of their job
duties, Chervon reasons, there exists an unreasonable risk that disclosure of
confidential information to these individuals would result in inadvertent
disclosure of that information. This is even more likely if, as Chervon
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suspects, Agnew and Alley actually have responsibilities that include patent
prosecution, licensing, or enforcement, or advising other competitive
decisionmakers on these topics. Id. at 3. Plaintiffs call Chervon’s charge
“speculative,” contending that there is nothing in their job descriptions
leading one to believe that Agnew or Alley have a competitive
decisionmaking role or advise such persons. (Docket #175 at 2). Moreover,
according to Plaintiffs, the protective order contains a patent prosecution bar,
so that if Agnew and Alley receive Chervon’s confidential information, they
will be barred from participating in drafting or amending patent claims. Id.
On the record presently before it, the Court finds that it must grant
Chervon’s motion. First, the Court agrees with Chervon that the protective
order plainly excludes an attorney not employed by a party. See (Docket #39
at 5); Mixing Equip., 1986 WL 9264, at *1. Perhaps Plaintiffs would have
preferred the protective order to say something else, but it is notable that
they joined with Chervon to request that the Court enter the order. (Docket
#38). No creative reading of the protective order can bring Agnew and Alley
within its purview. Moreover, if Plaintiffs truly believed that Agnew and
Alley act as in-house counsel for Techtronic, so as to bring them within the
scope of the protective order, they could have offered their sworn statements
to that effect rather than the unsworn opinions of counsel. See Civ. L. R.
7(h)(2) (permitting both the movant and non-movant to submit affidavits in
connection with expedited motion practice). Nor did Plaintiffs offer any
specific reason why these two men must be included in their litigation team,
although a showing of necessity would have aided their cause. See U.S. Steel,
730 F.3d at 1468 (noting that forcing an opponent to retain new counsel late
in a case would cause extreme hardship).
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Second, though the Court need not reach the issue, it observes that
even were it to assess Agnew and Alley’s job responsibilities under Deutsche
Bank, it would likely find that they should be denied access to Chervon’s
confidential information. For Alley, this is fairly clear, since Plaintiffs admit
that he is a patent attorney who engages in patent clearance, manages the
patent portfolio for his company, and advises his colleagues on patent-related
matters arising inside and outside of litigation. As to Agnew, although he is
a high-level manager of intellectual property for his business, he also advises
the company on “strategy” related to such matters. If that word is
appreciated in its full scope, it quite reasonably includes advising his client
on new research paths and what patent protection should be pursued for a
given invention. See Deutsche Bank, 605 F.3d at 1379–80. Such advice could, in
turn, be influenced, even innocently, by the technical data Agnew learned
from Chervon in the context of this lawsuit. See Brown Bag Software v.
Symantec Corp., 960 F.2d 1465, 1471 (9th Cir. 1992) (evaluating whether inhouse counsel could “lock up trade secrets in his mind, safe from inadvertent
disclosure”); Intel Corp. v. VIA Techs., Inc., 198 F.R.D. 525, 530 (N.D. Cal. 2000)
(noting danger that in-house counsel could be influenced by confidential
information she learned during the lawsuit); Datatrak Intern., Inc. v. Medidata
Solutions, Inc., No. 1:11 CV 458, 2011 WL 3652444, at *2 (N.D. Ohio Aug. 19,
2011) (finding that in-house counsel was a competitive decisionmaker where
he provided a wide range of legal and corporate development advice, despite
his averment that he did not participate in patent prosecution or technical
research).
The Court is further persuaded that Plaintiffs cannot simultaneously
provide Chervon with bare-bones descriptions of the responsibilities of these
two men and, in the same breath, claim that they clearly have no
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responsibilities touching on competitive decisionmaking. To adopt Plaintiffs’
position incentivizes unhelpful generality, and Plaintiffs cannot wield that
generality to avoid the rule of Deutsche Bank. Put differently, while Plaintiffs
accuse Chervon of speculating as to the nature of Agnew and Alley’s duties,
see (Docket #175 at 3), such speculation is precipitated by Plaintiffs’ choice to
describe their duties with vagueness. As a result, Chervon’s motion will be
granted.
Accordingly,
IT IS ORDERED that Chervon’s expedited motion for a protective
order (Docket #166) be and the same is hereby GRANTED.
Dated at Milwaukee, Wisconsin, this 21st day of April, 2017.
BY THE COURT:
J.P. Stadtmueller
U.S. District Judge
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