United States District Court, E.D. Virginia, Richmond Division
MEMORANDUM OPINION (Protective Order)
HENRY E. HUDSON, District Judge.
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 of the Proposed Protective Order. (ECF No. 49, Exhibits A and B thereto). 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. If the Petition is granted, 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.
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 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 Plaintiffs alleged predisposition to file serial lawsuits against Defendant on newly-issued patent claims. Thus, this Court exercises its "broad discretion, " and finds that ...