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British Telecommunications PLC v. IAC/Interactivecorp

United States District Court, D. Delaware

March 18, 2019




         Before the Court is The Parties' Joint Submission Regarding Proposed Protective Order. Dkt. No. 69. In the submission, the parties explain that they have been unable to reach agreement on all the terms of the proposed protective order in this case and that they require the Court's intervention to resolve the two remaining issues between them.

         In the joint submission, the parties each made brief factual presentations and legal arguments with respect to the two issues. Following receipt of the submission, the Court conducted a telephonic conference on March 6, 2019, and directed that plaintiff British Telecommunications PLC (“British Telecom”) submit declarations addressing certain points raised during the conference. At the conclusion of the conference, both sides stated that they did not wish to offer additional evidence bearing on the protective order issues. Pursuant to the Court's direction, British Telecom submitted a declaration, to which it added further argument. See Dkt. No. 77. The defendants filed a response to that submission. Dkt. No. 79. Based on the parties' written presentations and the arguments made by the parties during the telephonic conference, the Court makes the following rulings on the two issues in dispute.

         1. Access to Highly Confidential Information

         a. Factual Background

         The first issue that the parties presented in their joint submission was whether two in-house attorneys for British Telecom should be allowed access to the defendants' information designated as “highly confidential-outside attorneys' eyes only” (section 2.8 of the proposed protective order) and the defendants' information designated as “highly confidential-attorneys' eyes only- source code” (section 2.9 of the proposed protective order). In its supplemental submission, British Telecom withdrew its request with respect to one of the two in-house attorneys and limited its request as to the remaining in-house attorney to the materials covered by section 2.8 of the proposed protective order.

         British Telecom argues that its in-house attorney will be working on the litigation and needs to have access to the discovery information in the case in order to represent his client adequately. The defendants, on the other hand, argue that the in-house attorney is regularly engaged in patent enforcement on behalf of British Telecom and that his access to the defendants' highly confidential information could result in prejudice to the defendants in the event of any future patent disputes between the parties.

         The facts that bear on this issue, as summarized by the parties, are as follows: The in-house lawyer in question is Neil Hobbs, who is responsible for managing litigation for British Telecom in the United States. British Telecom takes the position that Mr. Hobbs is not involved in any competitive business decision-making for the company and is not involved in patent prosecution. His responsibilities, according to British Telecom, “involve management of the litigation and related settlement discussions, if any.” Dkt. No. 69, at 3. In his declaration, Mr. Hobbs states that as part of his responsibilities he is expected “to perform a similar role to that of outside counsel, ” including “reviewing all briefs, assessing the parties' respective positions, and making informed settlement recommendations.” Dkt. No. 77-1, at 1.

         The defendants argue that although British Telecom represents that Mr. Hobbs has limited roles and responsibilities within the British Telecom organization as a whole and that he does not prosecute patents, he clearly has a role in British Telecom's patent enforcement program. Based on their experience prior to the filing of this action, the defendants assert that Mr. Hobbs has participated actively in patent enforcement and licensing activities for British Telecom. During pre-filing meetings attended by Mr. Hobbs, according to the defendants, British Telecom presented not only the patents that were ultimately asserted in this action, but also numerous other patents that British Telecom represented were relevant to the defendants' commercial activities. The message from British Telecom, the defendants argue, was that the defendants “should pay license fees notwithstanding a weak case of infringement because [British Telecom] will use the size of its portfolio to harass IAC with more and more patent assertions.” Dkt. No. 69, at 4. The defendants contend that allowing Mr. Hobbs to have access to the details of the defendants' proprietary technical materials and source code “would be a significant tool in this process.” Id. at 5.

         British Telecom represents that Mr. Hobbs has no responsibilities within the organization outside of patent enforcement, assertion, and litigation activity, that he does not engage in patent prosecution, and that his portfolio is limited to the management of patent litigation and settlement negotiations. Dkt. No. 77-1, at 3-4. Although the defendants point out that Mr. Hobbs acknowledged working or collaborating with members of the British Telecom Intellectual Property Rights Licensing Team, which is responsible for “identifying opportunities for [British Telecom's] patent enforcement, licensing, and acquisitions, ” Dkt. No. 77-1, at 4, he stated in his declaration that his role in advising that team is limited to “evaluating the legal risks associated with U.S. litigation against target companies for [British Telecom's] licensing and/or enforcement programs but does not include identifying those targets nor the identification or evaluation of the patents to acquire, assert, or license, ” and that he is “not involved in identifying which specific patents are to be asserted against specific targets.” Id. at 3.

         In its supplemental submission, British Telecom agreed that Mr. Hobbs would not seek or obtain access to the defendants' source code referred to in section 2.9 of the Proposed Protective Order, Dkt. No. 69-1, which is entitled “Highly Confidential-Outside Attorneys' Eyes Only- Source Code.” British Telecom also agreed that if Mr. Hobbs actually reviews any of the material referred to in section 2.8 of the Proposed Protective Order, which is entitled “Highly Confidential-Attorneys' Eyes Only, ” he would “thereafter be barred, going forward, from participating in any way with any consideration of any additional [British Telecom] patents for assertion against these Defendants.” Dkt. No. 77, at 3.

         The Court accepts the representations in the parties' submissions as the factual basis for the Court's rulings.

         b. Analysis

          The parties do not disagree about the legal principles that apply to whether Mr. Hobbs should be allowed access to the defendants' highly confidential information produced during discovery. As a general matter, a party has a “strong interest in choosing its own counsel, particularly in the complex and technical realm of patent litigation.” Xerox Corp. v. Google, Inc., 270 F.R.D. 182, 185 (D. Del. 2010); Koninklijke Philips N.V. v. iGuzzini Lighting USA, Ltd., 311 F.R.D. 80, 87 (S.D.N.Y. 2015). An attorney's representation, moreover, generally comes with a right of access to all of the materials in the case, including confidential materials produced by the other side in discovery. That principle, however, must give way under various circumstances, such as when there is an unacceptably high risk of harm to a party from giving a particular individual access to that party's confidential materials.

         Federal Circuit cases set out the basic rules that apply here. In U.S. Steel Corp. v. United States, 730 F.2d 1465 (Fed. Cir. 1984), the court ruled that, as a general matter, a lawyer's access to confidential materials should not be determined based simply on whether the lawyer in question is in-house or retained. Id. at 1468. In particular cases, however, such as “where in-house counsel are involved in competitive decisionmaking, ” the court noted that “it may well be that a party seeking access should be forced to retain outside counsel or be denied the access recognized as needed.” Id. The court explained that the term “competitive decisionmaking” is “shorthand for 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, ” and that a protective order could enforce appropriate limitations on access to an opposing party's confidential materials. Id. at 1467, 1468 n.3; see also Matsushita Elec. Indus. Co. v. United States, 929 F.2d 1577, 1579 (Fed. Cir. 1991).

         The leading case from the Federal Circuit dealing with such protective orders is In re Deutsche Bank Trust Co. Americas, 605 F.3d 1375 (Fed. Cir. 2010). Deutsche Bank involved a request for a protective order that would prohibit plaintiff's trial counsel, who were given access to the defendant's confidential information, from participating in certain related patent prosecutions. In that setting, the court ...

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