146 F.3d 188 (3rd Cir. 1998), 97-5047, In re Bayer AG

Docket Nº:97-5047.
Citation:146 F.3d 188
Party Name:47 U.S.P.Q.2d 1001 In re Application Pursuant To 28 U.S.C.
Case Date:June 09, 1998
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit

Page 188

146 F.3d 188 (3rd Cir. 1998)

47 U.S.P.Q.2d 1001

In re Application Pursuant To 28 U.S.C. § 1782 for an Order

Permitting BAYER AG, Applicant-Appellant, to take discovery,

pursuant to the Federal Rules of Civil Procedure, of

Betachem, Inc. for use in an action pending in the First

Instance Court No. 25 of Barcelona, Spain.

Bayer AG, Appellant.

No. 97-5047.

United States Court of Appeals, Third Circuit

June 9, 1998

Argued Sept. 26, 1997.

As Amended July 23, 1998.

Page 189

Milton Sherman (Argued), Daniel L. Reisner, Kaye, Scholer, Fierman, Hays & Handler, New York City, for Appellant.

Dwight E. Yellen (Argued), Ballon, Stoll, Bader & Nadler, New York City, Will Levins Ballon, Stoll, Bader & Nadler, Hackensack, NJ, for Appellee.

Before: SLOVITER, COWEN and LEWIS, [*] Circuit Judges.


SLOVITER, Circuit Judge.

The promulgation of the Federal Rules of Civil Procedure, with their emphasis on securing "the just, speedy, and inexpensive determination of every action," Fed.R.Civ.P. Rule 1, initiated a revolution in the litigation process in the federal courts in this country. Although those rules were not applicable to foreign litigation, they were not without influence. It was not surprising that within three decades there would be a concerted effort to liberalize the procedures in the United States for assisting foreign and international tribunals and litigants in obtaining oral and documentary evidence in the United States. Eventually this effort led to congressional action. Section 1782(a) of Title 28 of the United States Code now authorizes district courts to render assistance to foreign courts and the litigants before them in obtaining discovery from United States residents for use in foreign proceedings.

Pursuant to that section, Bayer AG, a drug manufacturer organized under the laws of the Federal Republic of Germany, filed an application in the district court of New Jersey to obtain discovery from BetaChem, Inc., a New Jersey corporation, for use in a patent infringement action pending in the Court of First Instance in Spain. The district court denied the application and Bayer appeals. The question before us is whether the district court relied on inapplicable or erroneous considerations when it denied Bayer's request.


Facts and Procedural Background

In a related action, Bayer filed suit in January 1992 in the United States District Court for the Southern District of New York against Barr Laboratories, Inc., alleging patent infringement. Bayer alleged that Barr had infringed Bayer's United States ciprofloxacin patent no. 4,670,444 by filing an application with the United States Food and Drug Administration for permission to sell ciprofloxacin, a broad spectrum antibiotic drug. According to Bayer's allegations, Barr had purchased and planned to continue to purchase ciprofloxacin from BetaChem, which is the United States sales agent for Chemo Iberica, S.A. ("Chemo") and its affiliate Quimica Sintetica, S.A. ("Quimica"), both Spanish corporations. During the course of discovery in that action, Barr produced a confidential document that describes Chemo's process for making ciprofloxacin. Bayer also learned that BetaChem had submitted similar documents to the FDA on Barr's behalf.

Page 190

Apparently as a result of the information received, Bayer filed a patent infringement action in June 1993 against Chemo and Quimica in the Court of First Instance No. 25 in Barcelona, Spain, claiming that Chemo and Quimica had infringed and were infringing its Spanish process patent no. 505,138 by manufacturing and selling ciprofloxacin. Bayer believed the document it had received from Barr in discovery in the New York action was important for its case in Spain. Indeed, that document has been referred to as the "smoking gun document." App. at 100. Therefore, sometime in early 1996, Bayer sought to submit that document to the Spanish court. Before doing so, it sought permission from the magistrate judge who had entered a confidentiality order in the New York action. The magistrate judge gave approval, subject to the Spanish court's willingness to enter a confidentiality order.

Bayer then approached the Spanish court and on October 14, 1996, it obtained an order from the Spanish court stating that it would receive "any document that may be presented," that it would determine the document's admissibility at a later date, and that it would keep the document confidential to the extent permissible under Spanish law. Thereafter, the New York magistrate judge was reported to have signified his satisfaction that this order "effectively implements my confidentiality requirement." App. at 102.

On December 3, 1996, Bayer filed the pending action in the United States District Court for the District of New Jersey pursuant to 28 U.S.C. § 1782(a). Bayer alleged that it owned patents covering the composition and/or process for making ciprofloxacin in numerous countries, including its Spanish patent no. 505,138 covering a process for making ciprofloxacin; that Chemo and its affiliated corporation Quimica infringe that Spanish patent; and that BetaChem purchased ciprofloxacin from Chemo and/or Quimica which BetaChem in turn sold to Barr. Bayer alleged that BetaChem has material information about Chemo's process to make ciprofloxacin, and that Spanish law provides no procedures for the orderly exchange of documents. Bayer sought permission to seek discovery of all of BetaChem's documents relating to the process of Chemo and Quimica for manufacturing ciprofloxacin, including the Drug Master File allegedly containing the document that BetaChem had filed with the FDA on Barr's behalf. Bayer also sought permission to depose certain BetaChem employees.

BetaChem opposed Bayer's application on three grounds. First, it argued that discovery requests made pursuant to § 1782(a) may be granted only if the material sought would be discoverable in the foreign jurisdiction. In that regard, it submitted a written legal opinion from a Spanish attorney, who stated that under Article 603 of the Spanish Civil Procedure Law a Spanish court may, at the request of a party, order the disclosure of documents that are the exclusive property of a non-litigant if the judge who will decide the litigation determines that the documents sought would be material to the court's decision. App. at 61-62. BetaChem argued that, absent such a determination of materiality by the Spanish court, the testimony and materials sought by Bayer would not be discoverable in Spain and, therefore, are not discoverable under § 1782(a).

Second, BetaChem argued that because the Spanish action was already sub judice and Bayer had been aware of the documents since 1993, Bayer's application was untimely. Third, BetaChem argued that the documents in the Drug Master File are highly confidential and should not be discoverable.

In its opinion delivered orally, the district court, relying on our opinion in John Deere Ltd. v. Sperry Corp., 754 F.2d 132 (3d Cir.1985), framed its inquiry as whether permitting the discovery would "offend[ ] the foreign jurisdiction." App. at 94. Although the court stated that it did not consider discoverability in the foreign jurisdiction to be a prerequisite to obtaining discovery under § 1782(a), its discussion nevertheless focused exclusively on the requirement under Spanish law of a determination that the documents sought from a non-litigant would be material. The district court reasoned that even though it would probably regard the discovery Bayer sought to be material, its own view was irrelevant because it was the Spanish judge who was to make the materiality

Page 191

determination. The court then ruled that because Bayer had not obtained such a materiality ruling, the discovery it sought from BetaChem would not be discoverable in Spain and therefore Bayer lacked proof that granting its application would not offend the Spanish court. App. at 112-14. Accordingly, the district court denied Bayer's application and dismissed the action. This appeal followed.

On September 1, 1997, while this appeal was pending, the Court of First Instance ruled against Bayer in its infringement action. Bayer then filed an appeal in the Provincial Court of Barcelona. Both parties agree that, under Spanish law, the Provincial Court may, under certain circumstances, receive new evidence not submitted to the Court of First Instance. Accordingly, neither party contends that the issue before us has been mooted by the disposition in the Court of First Instance.



The district court's denial of Bayer's discovery application constitutes a final order over which we have jurisdiction pursuant to 28 U.S.C. § 1291. See In re Gianoli Aldunate, 3 F.3d 54, 57 (2d Cir.1993). In general, we review a district court's decision to deny a § 1782 application for abuse of discretion. Where the district court misinterpreted or misapplied the law, however, or where the court relied on inappropriate factors in the exercise of its discretion, our review is plenary. See id. at 58; see generally Redland Soccer Club, Inc. v. Department of the Army, 55 F.3d 827, 845 (3d Cir.1995).


Section 1782, entitled "Assistance to foreign and international tribunals and to litigants before such tribunals," provides, in relevant part:

The district court of the district in which a person resides or is found may order him to give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or international tribunal.... The order may be made pursuant to a letter rogatory issued, or request made, by a foreign or international tribunal or upon the application of any interested person ... The order may prescribe the practice...

To continue reading