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Evertz Microsystems Ltd. v. Lawo Inc.

United States District Court, D. Delaware

November 8, 2019

EVERTZ MICROSYSTEMS LTD., Plaintiff,
v.
LAWO INC., LAWO NORTH AMERICA CORP., and LAWO AG, Defendants.

          MEMORANDUM ORDER

          Jennifer L. Hall United States Magistrate Judge.

         Pending before the Court is Plaintiff's Renewed Motion Regarding a Protective Order Dispute. (D.I. 48.) Plaintiff Evertz Microsystems Ltd. (“Evertz”) and Defendants Lawo Inc., Lawo North America Corp., and Lawo AG (collectively, “Lawo”) dispute the scope of a protective order to govern the disclosure of confidential information produced in discovery. Although Evertz and Lawo agree that a protective order should be entered, they disagree about whether Evertz's long-time outside counsel should have access to Lawo's confidential technical information. For the reasons discussed below, I conclude that Evertz's outside counsel should be permitted access, and I order the parties to submit a proposed protective order complying with the restrictions set forth in this order.

         I. BACKGROUND

         On February 12, 2019, Evertz sued Lawo for infringement of U.S. Patent No. 8, 537, 838. (D.I. 1.) Before Lawo answered, Evertz amended its complaint to include infringement allegations for six additional patents. (D.I. 6.) Lawo answered on July 10, 2019 and filed an amended answer on August 7, 2019, asserting numerous affirmative defenses and counterclaims. (D.I. 18, 22.) Evertz moved to dismiss some of Lawo's counterclaims. (D.I. 26.) That motion remains pending.

         On October 3, 2019, Evertz filed its first motion to resolve a protective order dispute. (D.I. 35.) After reviewing the parties' submissions (D.I. 41, D.I. 44) and hearing argument on October 15, 2019, I denied the motion without prejudice and directed the parties to engage in good faith discussions to resolve the dispute based on the Court's instructions. (D.I. 45.) The parties' efforts were unsuccessful, and Evertz filed a renewed motion to resolve a protective order dispute. (D.I. 48, 52.) Lawo filed a response (D.I. 56), and I heard oral argument yesterday.

         The parties have conflicting views about the scope of the protective order to be entered by the Court. Evertz requests that Bhupinder Randhawa and Lawrence Yu of Bereskin & Parr, LLP, outside counsel for Evertz, be permitted to have access to material designated “Confidential” or “Highly Confidential Technical - Attorneys' Eyes Only.” Evertz is a Canadian company and Bereskin & Parr, a Canadian law firm, has acted as Evertz's outside counsel for nearly twenty years. (D.I. 52 at 2.)

         Evertz has provided the following information about Randhawa and Yu, which is unrebutted by Lawo.[1] Randhawa and others at his firm have represented Evertz for nearly twenty years. (D.I. 52 at 2.) Randhawa has participated in “patent preparation and prosecution for Evertz, ” and he and others at his firm have “provide[d] legal advice to Evertz on various patent matters including, for example, patentability, inventorship, and review of third-party patents.” (Id., Ex. 2 ¶ 4.) Although Randhawa “advise[s] Evertz on the technological aspects of Evertz's IP enforcement, ” he “do[es] not make determinations for Evertz about whether to pursue patent litigation against competitors or whether to license Evertz's patents to those competitors.” (Id., Ex. 2 ¶ 7.)

         Evertz wants the Bereskin & Parr attorneys on its litigation team in this case because they have gained “expertise in the relevant art” through their prior work with Evertz. (D.I. 52 at 2.) According to Evertz, absent access to Lawo's technical information, Randhawa and Yu will be unable to meaningfully assist Evertz's litigation team and Evertz will suffer substantial harm. (Id.) In order to minimize the risk of inadvertent disclosure of Lawo's information, Evertz has proposed that Randhawa and Yu be subject to a so-called “prosecution bar” that restricts them from performing patent prosecution work involving related technologies while this litigation is pending.

         Lawo seeks to prevent Randhawa's and Yu's access, arguing that it would create an unacceptably high risk of inadvertent disclosure or use of its confidential information. (D.I. 56 at 1.) Lawo argues that the risk is unacceptable regardless of the scope of any prosecution bar. (Id.) It also contends that Evertz's proposed prosecution bar is insufficient because it doesn't restrict Randhawa and Yu from participating in post-grant review proceedings.

         II. DISCUSSION

         A. Legal Standard

         A party has a strong interest in choosing counsel to represent it, and that counsel generally has a right to access all materials in the case including those produced confidentially during discovery.[2] See British Telecomms. PLC v. IAC/InterActiveCorp., 330 F.R.D. 387, 390 (D. Del. 2019). This general rule is not without limitations, and counsel's access to confidential information may be denied or limited when there is a high risk of inadvertent disclosure. See Id. Determining if there is a high risk of inadvertent disclosure is a fact-intensive inquiry that must be conducted on a counsel-by-counsel basis. See U.S. Steel Corp. v. United States, 730 F.2d 1465, 1468 (Fed. Cir. 1984). When conducting this inquiry, courts should not solely focus on whether counsel is in house or retained. Rather, the critical question is whether counsel “is in a position that creates a high risk of inadvertent disclosure.” Motorola, Inc. v. Interdigital Tech. Corp., C.A. No. 93-488-LON, 1994 WL 16189689, at *4 (D. Del. Dec. 19, 1994).

         When analyzing the risk of inadvertent disclosure, courts consider whether counsel is involved in “competitive decisionmaking.” British Telecomms., 330 F.R.D. at 390-91. Competitive decisionmaking has been defined 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.'” PhishMe, Inc. v. Wombat Sec. Techs., Inc., No. 16-403, 2017 WL 4138961, at *3 (D. Del. Sept. 8, 2017) (quoting U.S. Steel Corp., 730 F.2d at 1468 n.3). Courts undertake this analysis not because competitive decisionmakers take confidentiality obligations any less seriously than their counterparts, but because it helps assess whether counsel maintains a role that might make it difficult to compartmentalize her knowledge. See Motorola, Inc., 1994 WL 16189689, at *4; In re Deutsche Bank Trust Co. Ams., 605 F.3d 1373, 1378 (Fed. Cir. 2010) (“Courts have recognized . . . that there may be circumstances in which even the most rigorous efforts of the recipient of such information to preserve confidentiality in compliance with the provisions of such a protective order may not prevent inadvertent compromise. As aptly stated by the District of Columbia Circuit, ‘[I]t 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.'” (quoting FTC v. Exxon Corp., 636 F.2d 1336, 1350 (D.C. Cir. 1980)).

         If a court determines that there is a risk of inadvertent disclosure or use of confidential information, it “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.” Blackbird Tech LLC v. Serv. Lighting & Elec. Supplies, Inc., C.A. No. 15-53-RGA, 2016 WL 2904592, at *2 (D. Del. May 18, 2016) (quoting In re Deutsche Bank, 605 F.3d at 1380). One way to strike a balance between these competing interests is with a protective order. See British Telecomms., 330 F.R.D. at 390; see also Fed. R. Civ. P. 26(c) (providing that a court, for good cause shown, may issue an order protecting trade secrets and other confidential technical or commercial information). A court has broad discretion to fashion a protective order with the safeguards it deems appropriate in order to reduce the likelihood of inadvertent disclosure or use of confidential information without eliminating ...


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