Remington Arms Co., Inc., In re

Decision Date31 December 1991
Docket NumberNo. 90-2672,90-2672
Citation952 F.2d 1029
Parties, 21 Fed.R.Serv.3d 1253, 22 U.S.P.Q.2d 1063 In re REMINGTON ARMS COMPANY, INC., Petitioner.
CourtU.S. Court of Appeals — Eighth Circuit

Karen Iverson, Kansas City, Missouri, argued (John W. Shaw, Karen M. Iverson and Peter F. Daniel on brief), for appellant.

Arthur R. Miller, Cambridge, Mass., argued (Alfred W. Cortese, Jr., David G. Norrell, Kathleen L. Blaner and Elizabeth A. Miller, Washington, D.C., and Arthur R. Miller, on brief), for amicus/appellant.

Richard C. Miller, Springfield, Mo., argued (Richard C. Miller and Rana L. Faaborg on brief), for appellee.

Before BOWMAN, Circuit Judge, FLOYD R. GIBSON, Senior Circuit Judge, and WOLLMAN, Circuit Judge.

WOLLMAN, Circuit Judge.

Remington Arms Company, Inc. has filed a petition for a writ of mandamus in response to the district court's denial of Remington's motion for a protective order that would prohibit the discovery of certain documents. The district court ordered Remington to produce documents that Remington claims contain trade secrets and ordered Remington to show cause why sanctions should not be imposed for Remington's refusal to comply with the district court's earlier verbal discovery order. We issue the writ of mandamus, vacate the district court's orders for discovery and to show cause, and remand for further proceedings consistent with this opinion.

I.

John W. Hartman sued Remington as the result of a 1987 accident in which Hartman's gun, a Remington Model 700 bolt action rifle, allegedly discharged while Hartman was unloading the gun in the cab of his pickup truck. Hartman claims that he suffers a partial hearing loss as a result of this incident. Hartman asserted nine theories of negligence and strict liability in his complaint against Remington. In comprehensive requests for the production of documents, Hartman specifically sought information about Remington's "New Bolt Action Rifle" (NBAR) program. Remington objected to the request for NBAR documents, contending that they are confidential, highly proprietary trade secrets.

During a subsequent telephone conference with the district court, Hartman's counsel brought up the issue of the discoverability of the NBAR documents. Hartman's counsel asserted his opinion that the NBAR program is merely a continuation of the Model 700 rifle. Remington argued that a protective order could not guard against unauthorized disclosure of NBAR documents and that it should not be required to produce them for discovery. The district court responded:

Go ahead and produce them, and make up a protective order. You go ahead and produce them and we'll make a determination of whether they're admissible at trial. You go ahead and produce them. Anything else?

Remington then asked for an opportunity to brief the issue before the court entered an order directing Remington to produce NBAR documents, to which the district court replied: "Go ahead and produce them. If you want to take it up to the Eighth Circuit, you do it."

Remington then filed a motion for a protective order that discovery not be had, arguing that the disclosure of NBAR documents not be ordered because: (a) they are trade secrets; (b) Remington would suffer irreparable harm if the documents were disclosed; (c) Hartman could not establish both relevance and need for them; (d) a protective order could not adequately preserve the confidentiality of the information; and (e) public policy and constitutional considerations supported nondisclosure. Remington also requested that the court review the NBAR documents in camera to determine whether they are in fact trade secrets.

The district court denied Remington's motion for a protective order and directed Remington to produce NBAR documents without in camera review. Remington filed a petition for an emergency stay of the district court's order compelling discovery, pending the filing of a petition for extraordinary relief. We granted a stay, and Remington timely filed its petition for writ of mandamus.

II.

We possess discretionary writ-issuing authority under the All Writs Act, 28 U.S.C. § 1651(b). This authority is to be used, however, only where there is clear abuse of discretion or usurpation of judicial power. Iowa Beef Processors, Inc. v. Bagley, 601 F.2d 949, 953 (8th Cir.), cert. denied, 441 U.S. 907, 99 S.Ct. 1997, 60 L.Ed.2d 376 (1979). With full appreciation of the longstanding admonition against reviewing non-appealable orders, id., we believe that this case presents a situation in which we should invoke the power conferred by the All Writs Act. 1

In Iowa Beef, we "found mandamus to be an appropriate vehicle to review orders compelling the production" of trade secrets in the form of confidential business information. Id. at 953. The court noted the "serious policy considerations which we deem sufficiently compelling to require immediate appellate attention." Id. at 954. The present case is closely analogous to the situation that existed in Iowa Beef and similarly raises important policy considerations relating to the compelled discovery of trade secrets, the release of which Remington argues will have the effect of thwarting innovation and hampering competition. See Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 94 S.Ct. 1879, 40 L.Ed.2d 315 (1974).

Remington argues that its position within the firearms industry and its ability to compete in the firearms market are threatened by the disclosure of documents that it claims to be confidential, formative research and development files, generated in an effort to create a distinctly different new bolt action rifle. It argues further that because its NBAR designs are so novel, premature disclosure will seriously affect its ability to obtain patents on new concepts and designs. Remington also contends that a protective order will not preserve confidentiality and cannot effectively limit the dissemination of this confidential information.

Remington argues that mandatory disclosure of the questioned documents would have the effect of destroying its incentive to improve product safety, contending that the adversarial use of post-manufacture research efforts will discourage the development of new products.

Remington argues that in light of the foregoing adverse consequences that it contends would follow from compelled production of the NBAR documents, the procedure followed by the district court in ordering the discovery of the documents was inadequate to protect Remington's property interests in the documents, denying Remington as it did both reasonable notice and a meaningful opportunity to be heard.

III.

"Confidential business information has long been recognized as property." Carpenter v. United States, 484 U.S. 19, 26, 108 S.Ct. 316, 320, 98 L.Ed.2d 275 (1987). "Because of the intangible nature of a trade secret, [however,] the extent of the property right therein is defined by the extent to which the owner of the secret protects his interest from disclosure to others." Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1002, 104 S.Ct. 2862, 2872, 81 L.Ed.2d 815 (1984). Public disclosure of trade secrets extinguishes the owner's property rights. Id.

Federal Rule of Civil Procedure 26(c)(7) anticipates that in certain cases, discovery of trade secrets should either be limited or not permitted. Rule 26 provides, in part, that

for good cause shown, the court ... may make any order which justice requires to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense, including one or more of the following:

* * * * * *

(7) that a trade secret or other confidential research, development, or commercial information not be disclosed or be disclosed only in a designated way[.]

Fed.R.Civ.P. 26(c).

In light of the protection afforded to trade secrets by Rule 26(c)(7), courts have attempted to reconcile the competing interests in trade secret discovery disputes. First, the party opposing discovery must show that the information is a "trade secret or other confidential research, development, or commercial information," under Rule 26(c)(7) and that its disclosure would be harmful to the party's interest in the property. The burden then shifts to the party seeking discovery to show that the information is relevant to the subject matter of the lawsuit and is necessary to prepare the case for trial. American Standard Inc. v. Pfizer Inc., 828 F.2d 734, 740-41 (Fed.Cir.1987); Centurion Indus., Inc. v. Warren Steurer & Assoc., 665 F.2d 323, 325 (10th Cir.1981); Hartley Pen Co. v. United States Dist. Court, 287 F.2d 324, 331 (9th Cir.1961); Empire of Carolina, Inc. v. Mackle, 108 F.R.D. 323 (S.D.Fla.1985); Coca-Cola Bottling Co. v. Coca-Cola Co., 107 F.R.D. 288, 291 (D.Del.1985).

If the party seeking discovery shows both relevance and need, the court must weigh the injury that disclosure might cause to the...

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