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Carlson Pet Products, Inc. v. North States Industries, Inc.

United States District Court, D. Minnesota

July 9, 2019


          Bryon Wasserman and Frederick A. Tecce, Ice Miller LLP; Emeric J. Dwyer, Cameron Law Office Chartered; counsel for Carlson Pet Products, Inc.

          Thomas J. Leach, III, Michael A. Erbele, and Rachel C. Hughley, Merchant & Gould PC, counsel for North States Industries, Inc.


          Katherine Menendez United States Magistrate Judge

         Carlson Pet Products alleges that North States Industries sells pet gate products that infringe two of Carlson's patents. On May 13, 2019, following a pretrial conference, the parties informed the Court that they had reached agreement on nearly all terms of a proposed protective order, but that two issues remained unresolved. [Letter to Menendez, M.J. (May 13, 2019), ECF No. 70.] Specifically, the parties asked the Court to decide the following two questions:

(1) Should the protective order include a provision that allows in-house executives of North States, Dean Weisbeck and Julie Yager Grad, to have access to information that is designated as “confidential” or should such “confidential” documents only be available to lawyers?
(2) Should the protective order include the patent prosecution bar proposed by North States?

         The Court ordered the parties to file simultaneous letter briefs on these issues, which they did on May 24, 2019. [Text Only Order, ECF No. 71; Pl.'s Letter, ECF No. 74; Def.'s Letter, ECF No. 75.] The Court held a telephonic hearing on June 5, 2019, and informed the parties of its ruling on the first issue. The Court took the patent-prosecution bar under advisement and informed the parties that both decisions would be included in a subsequent written order. For the reasons that follow, the Court concludes: (1) that North States' proposal for a protective order that allows non-lawyers to see information designated as “confidential” is appropriate for this litigation; and (2) that North States' proposed patent prosecution bar is, in some respects, too broad for purposes of this litigation. However, the Court finds that a narrower prosecution bar is appropriate.

         I. Access to “Confidential” Documents

         The proposed protective order submitted by North States includes provisions that allow the parties to protect the confidentiality of discovery information through several tiers of designations: “Confidential”, “Confidential - Attorneys' Eyes Only”, and “Confidential - Attorneys' Eyes Only Prosecution Bar.” The two tiers involving Attorneys' Eyes Only designations cannot be viewed by any non-lawyer, but information designated as “Confidential” may be disclosed to certain non-lawyer employees of each side. North States identified Mr. Weisbeck and Ms. Yager Grad as the two non-lawyers that will have access to information designated as confidential. [Def.'s Letter, Ex. A, ECF No. 75-1.] Carlson argued that the “Confidential” designation is inappropriate because none of North States' non-lawyer personnel should be allowed to review Carlson's confidential information. [Pl.'s Letter at 4 (“Carlson respectfully submits that non-lawyer employees of North States should not be provided with access to Confidential Information.”).]

         As discussed at the June 5, 2019 telephonic hearing, the Court finds that the multi-tiered system proposed by North States is appropriate for this case. Similar provisions are commonly found in protective orders in the District of Minnesota, including those entered in other patent- infringement cases between direct competitors. The multi-tiered approach will adequately protect both sides' legitimate competitive interests. The parties are likely to exchange information that is non-public and merits a “Confidential” designation because it is generally not shared with the outside world. However, some of that information is unlikely to be so competitively sensitive that it is necessary to prevent anyone other than an attorney from reviewing it. Moreover, by identifying only two specific North States employees who are allowed to access information occupying this middle ground, the multi-tiered approach adds a greater layer of protection for “Confidential” information than is often offered. Such a provision significantly limits risks by ensuring that Carlson's “Confidential” information is not widely disseminated among North States personnel. The more restrictive tier of “Confidential - Attorneys' Eyes Only” designation can properly be invoked for information that is so competitively sensitive that it should not be made available to either party's non-lawyer personnel.

         Adopting Carlson's position and eliminating the “Confidential” category would require the Court to presume that all the potentially confidential information exchanged in this case needs the robust protection of an “Attorneys' Eyes Only” label. However, Carlson has not shown (and there is no reason to suspect) that discovery in this case will involve exclusively the exchange of confidential information deserving of such heightened protection. During the telephonic hearing, the Court encouraged the parties to avoid over-designation of documents with an “Attorneys' Eyes Only” label, as well as over-designation of documents as “Confidential” more generally. The parties should also work cooperatively to resolve any disagreements about the merits of any designation without the need for judicial intervention.

         For these reasons, Carlson's request that all non-lawyer employees of North States be denied access to any information marked “Confidential” under the protective order is denied.

         The Court will enter a protective order that adopts Paragraphs 3 and 4 of the proposed protective order attached to North States' Letter. [Defs.' Letter at 5-7, ¶¶ 3-4.] The Court notes that Paragraph 3(b)(2) of this proposed order identifies the two North States employees to whom “Confidential” information may be disclosed, but it does not include employees of Carlson to whom such information may be disclosed. Within seven days of this Order, counsel for Carlson shall advise the Court via e-mail of the names of non-lawyer employees to whom information designated as “Confidential” by North States may be disclosed.

         II. Prosecution Bar

         The more difficult issue raised by the parties is whether the protective order in this case should include a patent prosecution bar as requested by North States. North States asks the Court to include such language because several attorneys representing Carlson in this litigation also prosecute Carlson's patents before the United States Patent and Trademark Office (“USPTO”). Because Carlson's attorneys wear two hats, North States asserts that they should not be allowed to see competitively sensitive information that will be disclosed during discovery in this case while continuing to engage in patent-prosecution activities for the patents at issue or for similar patents. Although the proposed protective order already prohibits anyone from using another party's confidential discovery materials for any purposes other than this litigation, North States argues that greater protection is needed to guard against the risk that Carlson's counsel will inadvertently use such information in patent-prosecution activities, giving it an unfair competitive advantage.

         Carlson argues that the proposed prosecution bar is inappropriate for several reasons. Carlson suggests that this case simply will not involve the exchange of highly technical information that needs to be protected by a prosecution bar. Carlson also argues that the language North States has proposed is too broad because it would extend the bar for three years after the end of litigation, prevent Carlson's litigation counsel from providing even high-level advice regarding patent-prosecution activity, and cover prosecution proceedings that unfairly restrict Carlson's efforts to protect its intellectual property.

         For the reasons that follow, the Court concludes that a prosecution bar is appropriate in this case, but the precise prosecution bar proposed by North States is too broad in some respects.

         A. Legal Standards

         Because North States is the proponent of a prosecution bar in this case, it bears the burden to show there is good cause to include the disputed provisions in a protective order. See Fed.R.Civ.P. 26(c); In re Deutsche Bank Tr. Co. Am., 605 F.3d 1373, 1378 (Fed. Cir. 2010); Northbrook Digital, LLC v. Vendio Servs., Inc., 625 F.Supp.2d 728, 734 (D. Minn. 2008).

         Protective orders often include provisions that prohibit the use of confidential information for purposes other than the pending litigation, but courts have recognized that these provisions may not effectively protect against the possibility of inadvertent use in certain circumstances. This is because “‘it is very difficult for the human mind to compartmentalize and selectively suppress information once learned, no matter how well-intentioned the effort may be to do so.'” Deutsche Bank, 605 F.3d at 1378 (quoting FTC v. Exxon Corp., 636 F.2d 1336, 1350 (D.C. Cir. 1980)). In recognition of this reality, courts sometimes include provisions in patent cases that prevent a party's counsel from obtaining “‘extremely potent' confidential information” when they are also involved in “competitive decisionmaking.” See Id. (quoting U.S. Steel Corp. v. United States, 730 F.2d 1465, 1467 (Fed. Cir. 1984)). “Competitive decisionmaking” refers to:

a counsel's activities, association, and relationship with a client that are such as to involve counsel's advice and participation in any or all of the client's decisions (pricing, product, design, etc.) made in light of similar or corresponding information about a competitor.

Id. (quoting U.S. Steel, 730 F.2d at 1468 n.3).

         In patent litigation, the concern that an attorney who is engaged in competitive decision-making may inadvertently use confidential information produced in discovery arises “when trial counsel also represent the same client in prosecuting patent applications.” Id. at 1379. However, because patent prosecution involves a range of responsibilities, an attorney must be “substantially engaged with prosecution” to be considered a competitive decision-maker. Id. at 1380. Such substantial engagement involves several tasks, including:

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.

Id. at 1380. For attorneys engaged in these activities, the “risk of inadvertent disclosure of competitive information learned during litigation is ... much greater[.]” Id.; Northbrook Digital, 625 F.Supp.2d at 737 (“Protective orders issued by this Court in other patent cases have likewise recognized that attorneys who are directly involved in patent ...

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