Opinion
Case No. 2:05-cv-1039.
August 31, 2010
ORDER
This case is before the Court by way of a motion filed by plaintiff the Ohio Willow Wood Company for leave to disclose two documents, or sets of documents, to the United States Patent Office. The motion is opposed by both defendant ALPS South, LLC, which did not produce any of the documents in question, and by non-party Silipos, Inc., which produced one of them pursuant to a subpoena issued by OWW. Because the arguments concerning the so-called "Chen documents" and the "Silipos document" differ, the Court will deal with them separately.
I. The Chen Documents
There is litigation pending between ALPS and OWW in the Middle District of Florida concerning the parties' competing products and OWW's patents. In that case, OWW obtained copies of two letters, written and signed by ALPS' president, from non-parties John Y. Chen and Applied Elastomerics, Inc. All parties appear to agree that the production occurred under the auspices of a protective order issued by Magistrate Judge Mark A. Pizzo and that the documents were designated "Confidential — for trial counsel only" under that order. Apparently, OWW has never challenged that designation of the documents in the Florida court.
In its motion filed in this Court, OWW is asking permission to disclose those documents to the Patent Office in connection with re-examination proceedings which are currently ongoing and which involve three OWW patents. It claims that these documents contain information which is relevant to the re-examination process. According to OWW's supporting memorandum (Doc. #185), both letters were written in 1997 and show, among other things, ALPS's "intent to copy OWW liners." One of the letters also identifies OWW's major distributors of its liners. OWW does not explain exactly how it intends to use these letters as part of the patent re-examination process, but it notes in its reply that ALPS does not dispute their relevancy.
It is true that ALPS' opposing memorandum does not argue the relevancy of these documents to the patent re-examination process. It does argue, however, that OWW has not followed the correct procedure in attempting to gain permission to use them in a way not currently permitted by the protective order issued in Florida. It notes that the persons or entities who produced the documents were never served with a subpoena issued from this Court, and that they produced the documents in reliance upon a protective order. ALPS asserts both that OWW's request would, if granted, require this Court to modify a protective order issued by another court, and would also violate the due process rights of Mr. Chen and Applied Elastomerics because they have not been given notice and an opportunity to be heard on the issue here, although they would have been given such notice had the motion been filed in the Florida case. Because this procedural question is, with respect to the Chen documents, fundamental to the Court's ability to grant OWW's motion, regardless of whether it has merit, the Court must necessarily resolve the procedural question first.
The general rule concerning modification of protective orders issued by other courts has been stated in this way: "While courts may vacate protective orders issued by another court where the case has been closed or otherwise dismissed, . . . when the other matter is ongoing, courts have held that any request necessitating the modification of the protective order be directed to the issuing court." Mugworld, Inc. v. G.G. March Associates, Inc., 2007 WL 2229568, *1 (E.D. Tex. June 15, 2007) (internal citations omitted). There is some authority for the proposition that, under certain exceptional circumstances, a court can modify a protective order issued by another court notwithstanding the comity concerns raised by such an action.See, e.g., Tucker v. Ohtsu Tire Rubber Co., 191 F.R.D. 495 (D. Md. 2000); see also Donovan v. Lewnowski, 221 F.R.D. 587 (S.D. Fla. 2004). It is not necessary for this Court to decide if it agrees that such exceptions to the general rule should be recognized, because none of the ones enumerated in Tucker would apply here. The primary reason for not deferring to another court's interest in the enforcement or modification of its own order is the fact that the case in which the order was issued is no longer pending, and that is manifestly not the situation presented here. Thus, there is really no reason for this Court not to afford the order of its sister District Court in Florida the comity to which its protective order is entitled. See Dushkin Pub. Group v. Kinko's Service Corp., 136 F.R.D. 334, 335-36 (D.D.C. 1991) ("this court as a matter of comity respects the order issued by [another district court]" and any request to modify that order "should be addressed to the issuing court . . .").
OWW's reply memorandum makes only one argument in opposition to the application of this fundamental principle (and cites no case law on point). Because OWW had disclosed the Chen documents to this Court as part of its motion (although it did so under seal), ALPS filed a motion in the Florida case to have OWW held in contempt. The Florida court denied the motion without opinion. OWW asserts that this ruling shows that the Florida court "does not dispute the propriety of OWW seeking relief from this Court to allow the disclosure of the Chen Documents to the USPTO." OWW's reply memorandum, Doc. #201, at 2. (The rest of OWW's reply (and a portion of ALPS response) is directed to the question of whether OWW requested, and whether ALPS should have produced, the Chen documents in this case, but no motion to compel production of those documents has been filed, so these arguments are irrelevant to the issue raised by OWW's motion).
The Court does not draw the same conclusion as OWW does from what occurred in Florida on the motion for contempt. Whether OWW ought to be held in contempt for disclosing confidential documents to this Court, under seal, and whether this Court should afford due respect to an order issued by a different federal court, are two entirely separate inquiries. Nothing in the docket entry denying ALPS's motion for contempt can be construed as inconsistent with the principle that a motion to modify a protective order should ordinarily be directed to the court which issued it. Further, OWW has never explained why it has chosen not to seek this modification from the Florida court, or why it would be inappropriate to do so. For all of these reasons, the Court agrees with ALPS that the portion of OWW's motion relating to the Chen documents should be directed to the United States District Court for the Middle District of Florida in the first instance.
II. The Silipos Document
Unlike the Chen documents, the Silipos document was produced in this litigation. Silipos is not a party to this case, but it was served with a subpoena and produced a number of documents in response, some of which it designated as deserving protection under the protective order currently in place. That protective order, among other things, prohibits the use, for purposes other than this litigation, of documents designated as confidential. Of course, use in the course of a patent re-examination proceeding exceeds that limitation, which is why OWW has asked for a modification of the order.
OWW has identified only one document produced by Silipos which it wants to use in this fashion. The document is described as "an internal Silipos New Product Design Brief." It was used as an exhibit during the hearing on OWW's motion for a preliminary injunction. Without revealing the substance of the document (which both OWW and Silipos describe in detail in their sealed filings on this issue, and which is attached as an exhibit to OWW's supporting memorandum (Doc. #185)), the document evaluates Silipos' efforts in 2001 to enter the "suction sleeve liner market" and Silipos' effort to manufacture a liner that addresses perceived problems with its product in the exiting marketplace. According to OWW, this information would be relevant to the patent re-examination process because it is contrary to the claim that OWW's patent is void for obviousness. Also, according to OWW, the information contained in the document is old, reflects past events, and would not damage Silipos' business if disclosed. OWW also notes that there is some chance that the document will not become available to the public as a result of the re-examination process, although that would occur only if the patent examiner concludes, contrary to OWW's claim, that the information contained in the document is not material to the re-examination process.
Silipos opposes relaxing the protective order so that this document can be used in the re-examination proceedings. Apart from arguments that OWW lost this same argument in another case and that its conduct has been vexatious, Silipos takes issue both with the suggestion that the document is material to the patent re-examination process and that its release would not harm Silipos' business interests. Silipos states that even though the document was prepared a number of years ago, it still markets the product described in the document, and the release of its own self-critical evaluation of its product in comparison to the products sold by OWW and other competitors would put it at a substantial disadvantage in the marketplace.
The Court begins by noting that there does not seem to be a protective order in place in this case. In a filing dated April 24, 2009, ALPS asked for leave to file certain documents under seal and stated that the parties were "in the process of negotiating a protective order agreement for this case. . . ." Doc. #69, at 1. However, no such order appears on the docket after that date (or, for that matter, prior to that date). A protective order was filed in Case No. 2:04-cv-1223, The Ohio Willow Wood Company v. ALPS South Corporation (S.D. Ohio) on July 26, 2005, but that case was stayed and then administratively closed on April 18, 2007, and remains in that status. See Doc. #105 in Case No. 2:04-cv-1223 (Order, per Frost, J., continuing the stay and administrative closure of the case). The subpoena pursuant to which Silipos produced the document in question was not issued in that case.
Neither OWW nor Silipos has identified by docket number, or otherwise, the exact protective order which they believe governs this dispute. When the document at issue was subpoenaed from Silipos, it initially objected and joined in a motion which ALPS had filed seeking a protective order, and later filed its own motion to quash. Subsequently, it withdrew that motion by way of a filing which indicated that the parties had reached an agreement concerning the issues raised in the motion to quash. According to a document attached to Silipos' memorandum in opposition to the instant motion to permit disclosure, the parties' agreement included a provision that the documents were to be produced under the "Ohio Protective Order" and that the subpoena pursuant to which the documents would be produced, although served out of the Western District of New York, "will be subject only to the Ohio Court, its local rules, and its existing protective order in the case." See Doc. #193, Ex. B-2. It seems apparent that the "case" referred to in this stipulation is this case, but, again, there is no existing protective order in the case.
This procedural background creates somewhat of a conundrum for the Court. Technically, the Silipos document is not restricted from disclosure pursuant to a court order, and there is no order from which OWW need seek relief. On the other hand, Silipos appears to have produced potentially sensitive documents under a good faith belief, apparently shared by OWW, that there is such an order. The Court will resolve this procedural dilemma by ordering, as part of this order, that OWW make no use nor any disclosure of documents produced by Silipos and designated as protected in some fashion under the parties' agreement (the Court assumes there is an agreed order that has simply never been submitted to the Court) unless and until the parties agree or the Court orders otherwise, subject to the formal submission for approval of the protective order under which the parties believe they are operating. Because no order currently exists, however, the Court will treat the issue before it as a motion, filed by Silipos, for a protective order under Fed.R.Civ.P. 26(c), and will proceed to determine if Silipos has demonstrated good cause for an order restricting use of the document in question to this litigation and the disclosure of the document only to the parties or their counsel, as opposed to the proposed and potentially public disclosure of the document to the United States Patent Office.
Generally, a protective order restricting the use of documents or information produced during discovery may issue upon a showing of good cause. Rule 26(c) lists a number of restrictions which a court may impose, and, in subsection (G), provides for an order that "trade secret or other confidential research, development, or commercial information not be revealed or be revealed only in a specified way. . . ." The Court construes Silipos' argument to be that the information in the document is confidential research or development information, and that to reveal it to Silipos' competitors would be prejudicial. It supports that argument with a declaration from Andrew McKelvey, a Senior Vice President, which states, among other things, that the document was never intended to be disclosed outside the company, that the product described in the document is still being marketed, and that competitors could use the information, albeit improperly, to injure Silipos' business. The Court's own review of the document is consistent with that assessment.
OWW has not provided any evidence to contradict Mr. McKelvey's declaration. However, in its reply, it argues that any potential harm to Silipos from public disclosure of the document is speculative because it does not contain technical data that a competitor could use to its advantage. It also argues that the benefit to OWW from being able to use the document in the re-examination process outweighs any potential detriment to Silipos.
It bears mentioning, first, that Silipos is not a party to this case. Therefore, as a non-party, it is entitled to be treated favorably concerning any burden or prejudice that might result from its being forced into the discovery process via a non-party subpoena. Second, the Court is not persuaded that prohibiting OWW from using this document in the re-examination process would materially prejudice OWW's rights. The document contains little, if any, discussion of OWW's product, which is the product for which the patent issued, no discussion of obviousness, and little in the way of information that would support a claim that any specific feature of OWW's patented product is not obvious. At best, it suggests that Silipos may have faced certain manufacturing challenges in trying to improve the performance of its own product. Presumably, OWW has had access to the Silipos product and is fully able to explain to a patent examiner why its own product is superior in significant and non-obvious ways. Any benefit to OWW from use of this document would appear to be marginal at best. On the other hand, Silipos has made a credible showing, supported by evidence, that it could suffer harm from the disclosure of the document — and not, as OWW suggests, from any misappropriation of technical information by competitors, but by a competitor's decision to seize upon statements made in a self-critical examination of the product and publicize them as evidence that the Silipos product is inferior. That is a type of injury which Rule 26(c) allows the Court to take into account, as is the fact that Silipos has made efforts (apparently successful) to restrict public disclosure of the document since its creation. See, e.g., Nestle Foods Corp. v. Aetna Cas. Surety Co., 129 F.R.D. 483 (D.N.J. 1990). As theNestle decision also points out, the Court may use its knowledge of the background facts and its common sense in evaluating a claim of competitive harm, and it does seem likely that a competitor could use the information contained in the document exactly in the way that Silipos fears. For all of these reasons, the Court concludes that Silipos has made the necessary showing of good cause, and that the Court should order that OWW not make use of the document in question in any proceeding where public disclosure of the document is a possible result.
III. Conclusion and Order
For the foregoing reasons, OWW's motion to permit disclosure (#185) is denied. It is further ordered that any documents produced by Silipos, Inc., pursuant to the stipulation entered into between OWW and Silipos shall not be disclosed or used in any way contrary to the parties' agreement or understanding concerning the disclosure or use of such documents. The parties shall submit a proposed protective order covering these documents within fourteen days of the date of this order.
IV. Appeal Procedure.
Any party may, within fourteen (14) days after this Order is filed, file and serve on the opposing party a motion for reconsideration by a District Judge. Fed.R.Civ.P. 72(a). The motion must specifically designate the order or part in question and the basis for any objection. Fed.R.Civ.P. 7(b). Responses to objections are due ten days after objections are filed and replies by the objecting party are due seven days thereafter. Eastern Division Order No. 91-3, pt. I., F., 5. The District Judge, upon consideration of the motion, shall set aside any part of this Order found to be clearly erroneous or contrary to law. Fed.R.Civ.P. 72(a); 28 U.S.C. § 636(b)(1)(A).
This order is in full force and effect, notwithstanding the filing of any objections, unless stayed by the Magistrate Judge or District Judge. S.D. Ohio L.R. 72.3.