United States District Court, D. Delaware
CHRISTOPHER J. BURKE, UNITED STATES MAGISTRATE JUDGE.
before the Court in this patent infringement action is
Plaintiff PhishMe, Inc.'s ("Plaintiff or
"PhishMe") letter motion seeking to modify the
Protective Order entered in this case ("Motion").
(D.I. 93, 96) The Motion is opposed by Defendant Wombat
Security Technologies, Inc. ("Defendant" or
"Wombat"). For the reasons discussed below, the
Court DENIES Plaintiffs Motion.
1, 2016, Plaintiff commenced Civil Action Number
16-403-LPS-CJB against Defendant; the operative complaint
in that case now alleges that Defendant infringes United
States Patent No. 9, 398, 038. (D.I. 1; D.I. 16) Defendant
has, inter alia, asserted Lanham Act and state law
counterclaims in that case related to another PhishMe patent,
U.S. Patent No. 9, 356, 948 (the '"948
patent"). (D.I. 18) In its counterclaims, Defendant has
alleged (and for our purposes, there really is no dispute)
that it and Plaintiff are direct competitors in the market
for, inter alia, cyber security awareness and
training software for organizations. (Id. at 8 at
¶ 1; id. at 10-11 at ¶¶ l 1-19;
id. at 12 at ¶ 29; id at 29 at ¶
155; see also D.I. 99 at 1; D.I. 103, ex. 2
("Tr.") at 25 (Wombat's counsel noting that the
parties are "vigorous competitors")) On June 28,
2017, Chief Judge Leonard P. Stark referred the case to the
Court to hear and resolve all pre-trial matters, up to and
including the resolution of case-dispositive motions. (D.I.
jointly-proposed Protective Order was entered by the Court in
Civil Action Number 16-403-LPS-CJB on November 1, 2016. (D.I.
24) That Protective Order, at issue here, requires that,
inter alia, there be three levels of protection for
confidential information: (1) "CONFIDENTIAL Material,
" which up to three of each party's employees,
officers or directors can access; (2) "ATTORNEY'S
EYES ONLY ['AEO'] Material, " with access
restricted to a smaller group of persons, including outside
counsel (but not including any party employees, officers or
directors); and (3) "Prosecution Bar Material, "
with access restricted to outside counsel and further
conditioned on forbearance from certain patent prosecution
activities. (D.I. 24 at 2-4, 9-13; D.I. 96 at
To date, Wombat has produced a significant amount of AEO
Material to PhishMe, including documents reflecting
Wombat's business and products, financial position,
strategic planning, competitive intelligence, and customer
contract negotiations. (D.I. 99 at 2-3; D.I. 105 at 2 &
ex. 1; Tr. at 25) Indeed, it appears that a significant
amount of the documents that each side has produced to the
other in this case have been designated as AEO Material.
(D.I. 96, ex. 4 at ¶6; Tr. at 15, 25)
16, 2017, Plaintiff commenced a second case against
Defendant, alleging infringement of U.S. Patent Nos. 9, 591,
017 and 9, 674, 221. That action-Civil Action No.
17-769-LPS-CJB-was also referred to the Court to hear and
resolve all pre-trial matters, up to and including the
resolution of case-dispositive motions. (Civil Action No.
17-769-LPS-CJB, D.I. 9) Thereafter, Civil Action No.
17-769-LPS-CJB was consolidated with Civil Action No.
16-403-LPS-CJB by joint stipulation and by order of the
Court. (D.I. 86) The Protective Order at issue here thus
applies to both of the consolidated cases.
19, 2017, the parties notified the Court of the instant
Motion. (D.I. 93) With the Motion, Plaintiff asks the Court
to modify the Protective Order to permit one in-house counsel
of Plaintiff to access AEO Material: Plaintiffs General
Counsel, Secretary and Chief Privacy Officer Shane McGee, who
joined Plaintiff (and took on each of those roles) on October
31, 2016. (D.I. 96 at 1; see also id, ex. 2 at 10;
id., ex. 4 at ¶ 3; D.I. 103, ex. 1 at ¶ 1)
The parties thereafter filed letter briefs in support of
their positions. (D.I. 96; D.I. 99) The Court held a
teleconference to address the Motion on August 10, 2017.
Following the teleconference, the Court ordered that the
parties may file one additional submission apiece that
addressed certain issues raised during the teleconference.
Each side then submitted supplemental materials, and the
briefing was closed on August 18, 2017. (D.I. 103; D.I. 105)
Rule of Civil Procedure 26(b)(1) permits, with certain
limits, "discovery regarding any nonprivileged matter
that is relevant to any party's claim or defense[.]"
Fed.R.Civ.P. 26(b)(1). A producing party may ask the Court to
minimize its burden to turn over discoverable information by
ordering that a protective order be issued, to protect it
from "annoyance, embarrassment, oppression, or undue
burden or expense[.]" Fed.R.Civ.P. 26(c)(1). One such
order can allow that "a trade secret or other
confidential research, development, or commercial information
not be revealed or be revealed only in a specified way[,
]" id, to, inter alia, an attorney for
one of the parties, see Blackbird Tech LLC v. Serv.
Lighting & Elec. Supplies, Inc., Civil Action No.
15-53-RGA, 2016 WL 2904592, at *1 (D. Del. May 18, 2016). A
party seeking a modification to a protective order (here,
Plaintiff) regarding an attorney's access to otherwise
protected information carries the burden of demonstrating
"good cause" for the modification. Cf. In re
Deutsche Bank Trust Co. Ams., 605 F.3d. 1373, 1378 (Fed.
Cir. 2010); Pansy v. Borough of Stroudsburg, 23 F.3d
772, 790 (3d Cir. 1994); Apeldyn Corp. v. AU Optronics
Corp., Civil Action No. 08-568-SLR, 2012 WL 2368796, at
*2 (D. Del. June 13, 2012); Phillips Petroleum Co. v.
Rexene Prods. Co., 158 F.R.D. 43, 46 (D. Del. 1994);
Cytosport, Inc. v. Vital Pharm., Inc., No. CIV.
S-08-2632 FCD/GGH, 2010 WL 728454, at *1 & n.3 (E.D. Cal.
Mar. 2, 2010); see also (Tr. at 18).
United States Court of Appeals for the Federal
Circuit has stated that in determining whether
good cause has been shown to support modification to a
protective order of the type at issue here, a court must
first consider whether the modification would bring with it
an "unacceptable risk of inadvertent disclosure" or
competitive misuse of confidential information. In re
Deutsche Bank, 605 F.3d. at 1378-79 (citation
omitted). The Court must then "balance"
that risk against the potential harm to the moving party,
were the modification not to be adopted, and were it to thus
face restrictions on its right to have the benefit of counsel
of its choice. Id. at 1380.
Unacceptable Risk of Inadvertent Disclosure or Competitive
assessing whether a proposed modification of a Protective
Order would present an unacceptable risk of inadvertent
disclosure or competitive misuse of confidential information,
it would be error to deny access solely because of an
in-house counsel's "general position"; instead,
"the factual circumstances surrounding each individual
counsel's activities, association, and relationship with
a party ... must govern any concern for inadvertent or
accidental disclosure." U.S. Steel Corp. v. United
States, 730 F.2d 1465, 1467-68 (Fed. Cir. 1984); see
also Boehringer Ingelheim Pharm., Inc. v. Hereon
Labs. Corp., Civ. A. No. 89-484-CMW, 1990 WL 160666, at
*1 (D. Del. Oct. 12, 1990). This decision will turn, then, on
a fact-intensive inquiry into whether affected counsel (here,
Mr. McGee) participates in "competitive
decisionmaking" at PhishMe. U.S. Steel Corp.,
730 F.2d at 1467-68; In re Deutsche Bank, 605 F.3d
at 1378. The Federal Circuit has defined "competitive
decisionmaking" as "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." U.S. Steel Corp., 730 F.2d
at 1468 n.3; see also In re Deutsche Bank,
605 F.3d at 1378-79.
the parties focus much of their briefing on whether Mr.
McGee, in fact, participates in competitive decisionmaking.
The Court will similarly reserve much of its focus for this
issue. In addressing that question, it makes sense to first
assess what we know about Mr. McGee's responsibilities at
PhishMe (drawn from two declarations that Mr. McGee has
submitted and a few other materials of record):
• Mr. McGee states that, in his role as General Counsel,
he is "responsible for all of PhishMe's legal
affairs and provide[s] advice and counsel to the company on
legal, compliance, and privacy matters." (D.I. 96, ex. 4
at ¶ 3) He reports directly to Rohyt Belani,
PhishMe's Chief Executive Officer ("CEO").
• Mr. McGee avers that while he "participate[s] in
evaluating whether other companies are infringing
PhishMe's intellectual property rights and in formulating
enforcement strategies [, ]" he is "not authorized,
however, to make the ultimate decisions on whether and on
what terms to license PhishMe's intellectual property,
including the patents PhishMe has asserted against Wombat, or
on whether to enforce PhishMe's patents against entities
it believes infringe[, ]" or as to whether initiate or
settle litigation. (Id. at ¶¶ 4-5)
PhishMe's CEO and its Board of Directors
("Board") make those "ultimate decisions
[.]" (Id. at ¶ 4)
• Mr. McGee also manages PhishMe's "outside
patent prosecution counsel in the prosecution of patent
applications and in post-issuance proceedings related to
PhishMe's patents." (Id. at ¶ 5)
• Additionally, Mr. McGee supervises two other in-house
attorneys and a barrister-in-training. (Id. at
¶ 3) One of those two attorneys, inter alia,
reviews and drafts contracts, developing contractual language
based on terms negotiated by ...