Hitkansut LLC v. United States

• Decision Date: 28 May 2013
• Docket Number: No. 12-303C,12-303C
• Parties: HITKANSUT LLC, a Michigan corporation, & ACCELEDYNE TECHNOLOGIES, LTD., LLC, a Michigan corporation, Plaintiffs, v. UNITED STATES, Defendant.
• Court: U.S. Claims Court

HITKANSUT LLC, a Michigan corporation, & ACCELEDYNE TECHNOLOGIES, LTD., LLC,

a Michigan corporation, Plaintiffs,

v.UNITED STATES, Defendant.

No. 12-303C

United States Court of Federal Claims

Filed: May 28, 2013

Patent case; production in discovery of

information related to or derived from

cooperative research and development

agreements; statutory protection against

disclosure; 15 U.S.C. § 3710a(c)(7);

inventor's access to confidential technical

information of opposing party

John S. Artz, Dickinson Wright, PLLC, Troy, Michigan, for plaintiffs. With him on the briefs was J. Bradley Luchsinger, Dickinson Wright, PLLC, Troy, Michigan.

Gary L. Hausken, Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, D.C., for defendant. With him on the briefs were Stuart F. Delery, Principal Deputy Assistant Attorney General, and John Fargo, Director, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, D.C.

OPINION AND ORDER

LETTOW, Judge.

Plaintiffs Hitkansut LLC and Acceledyne Technologies, Ltd., LLC (collectively, "Hitkansut") have moved to compel the production from the government of information related to or derived from cooperative research and development agreements ("CRADAs") to which the government is a party. Hitkansut also asks the court to enter a protective order that grants Ms. Donna Walker, a principal of both plaintiff corporations, access to confidential technical information. The issues have been fully briefed, and a hearing was held on March 25, 2013. The motion is accordingly ready for disposition.

BACKGROUND

Hitkansut filed suit in this court on May 10, 2012, alleging that the government had infringed its patent, United States Patent No. 7,175,722 ("the '722 patent"), and seeking torecover compensation for an allegedly infringing use by Oak Ridge National Laboratory ("Oak Ridge" or "the government"). Compl. ¶¶ 1, 10. It contends that the '722 patent protects "a method of achieving a desired physical property in a structure . . . through the concurrent application of two different energies. . . . The first energy may be thermal energy (i.e. heat) and the second energy may be mechanical vibration, sonic, laser, microwave, or magnetic energy." Brief in Support of Pls.' Mot. to Compel and For Entry of a Protective Order ("Pls.' Mot.") at 1-2, ECF No. 11. Hitkansut alleges that Oak Ridge employs a thermomagnetic processing means in research and in contractual CRADAs with private entities, and that research and those contracts infringe the '722 patent. Id. at 2-3. The government disputes these claims. Resp. of the United States to Pls.' Mot. to Compel and for Entry of a Protective Order ("Def.'s Opp'n") at 3, ECF No. 12.

After the suit progressed into the discovery phase, Hitkansut moved pursuant to Rule 37(a) of the Rules of the Court of Federal Claims ("RCFC") to compel the production of information derived from, and related to, CRADAs which were entered into by the government with private, third-party partners. See Pls.' Mot. at 2-3.¹ Hitkansut seeks to learn how the government's allegedly infringing "process was operated, under what parameters, [using] what temperatures and what times." Hr'g Tr. 6:11-21 (Mar. 25, 2013). It also seeks disclosure of financial information related to the CRADAs because that information is "relevant to . . . a determination of the amount of compensation owed to [Hitkansut] for any infringement and the commercial success of the [thermomagnetic process at issue]." Pls.' Mot. at 4; see also Hr'g Tr. 41:5-9. The government avers that it has withheld information provided by third-party CRADA partners pursuant to a privilege set forth in Section 11 of the Stevenson-Wydler Technology Innovation Act of 1980, Pub. L. No. 96-480, 94 Stat. 2311, as amended by the Federal Technology Transfer Act, Pub. L. No. 99-502, 100 Stat 1785, 1797 (1986) (codified as amended at 15 U.S.C. § 3710a) ("FTTA" or "the Act"), specifically at 15 U.S.C. § 3710a(c)(7). See Def.'s Opp'n at 7.

Hitkansut also asks the court to enter a protective order that permits its principal, Ms. Walker, the inventor of the '722 patent, access to non-financial, confidential technical information obtained in discovery from the government and third parties. Pls.' Mot. at 11-12. It argues that access by Ms. Walker is necessary for plaintiff to "evaluate technical information concerning the accused thermomagnetic process. . . . Specialized knowledge of materials science, metallurgy, physics, and mathematics all come into play in understanding this pioneering technology. . . . [T]he advice of Ms. Walker is essential to the proper handling of this litigation." Id. at 11. The government opposes such a grant of access in a protective order, arguing that Ms. Walker is a decisionmaker at and consultant to competitors of Oak Ridge and its third-party partners, and thus should be barred from accessing proprietary information under RCFC 26(c)(1). Def.'s Opp'n at 15, 17-21.

ANALYSIS

I. 15 U.S.C. § 3710a(c)(7)(A) and (B)

The FTTA authorizes the director of any laboratory operated by the federal government to enter into CRADAs with private entities, in part to encourage transfer of technology from federal government-operated laboratories to private industry. See 15 U.S.C. § 3710a(a)(1); Chemical Serv., Inc. v. Environmental Monitoring Sys. Lab.-Cincinnati of the U.S. E.P.A., 12 F.3d 1256, 1258 (3d Cir. 1993). The statutory provision at issue in this instance, Paragraph 3710a(c)(7), provides two types of protection from disclosure for "trade secrets or commercial or financial information that is privileged or confidential," depending upon the source of the information. See DeLorme Publ'g Co. v. National Oceanic and Atmospheric Admin. of the U.S. Dep't of Commerce, 917 F. Supp. 867, 872 (D. Maine 1996). Paragraph 3710a(c)(7) states:

(A) No trade secrets or commercial or financial information that is privileged or confidential, under the meaning of section 552(b)(4) of Title 5 [the Freedom of Information Act ("FOIA")], which is obtained in the conduct of research or as a result of activities under this chapter from a non-[f]ederal party participating in a cooperative research and development agreement shall be disclosed.

(B) The director, or in the case of a contractor-operated laboratory, the agency, for a period of up to 5 years after development of information that results from research and development activities conducted under this chapter and that would be a trade secret or commercial or financial information that is privileged or confidential if the information had been obtained from a non-[f]ederal party participating in a cooperative research and development agreement, may provide appropriate protections against the dissemination of such information, including exemption from subchapter II of chapter 5 of Title 5.

15 U.S.C. § 3710a(c)(7). Subparagraph (c)(7)(A) pertains to information obtained by or derived from a private party participating in a CRADA, and Subparagraph (c)(7)(B) concerns information belonging to the federal party. The decision in DeLorme applied the latter of these provisions.

In DeLorme, a plaintiff sought disclosure under FOIA of electronic "raster" compilations of National Oceanic and Atmospheric Administration's ("NOAA's") nautical charts. 917 F. Supp. at 870. Among other things, FOIA allows agencies to withhold records that are "specifically exempted from disclosure by statute," i.e., where a statute "(i) requires that the matters be withheld from the public in such a manner as to leave no discretion on the issue; or (ii) establishes particular criteria for withholding or refers to particular types of matters to be withheld." 5 U.S.C. § 552(b)(3)(A). The court in DeLorme explained that 15 U.S.C. § 3710a(c)(7) was such a statute limiting disclosure, and deemed NOAA's raster compilations to be commercial and confidential information that resulted from research and development activities under the FTTA. 917 F. Supp. at 872-74. Thus, it held that NOAA, pursuant to Subparagraph 3710a(c)(7)(B), was empowered to withhold its "raster" compilations for a period of up to five years from the date of their development. Id. at 874.

Other cases have examined the first provision, Subparagraph 3710a(c)(7)(A), which governs disclosure of qualifying information belonging to a private party to a CRADA. In Spectrum Scis. & Software, Inc. v. United States, 84 Fed. Cl. 716 (2008), a private supplier brought a breach of contract suit against the government, alleging that the Air Force breached the terms of its CRADA by releasing the private supplier's proprietary information. 84 Fed. Cl. at 734. The court's decision opined that Subparagraph (A) of § 3710a(c)(7) "flatly prohibit[s] agencies from disclosing private commercial information 'obtained in the conduct of research . . . from a non-[f]ederal party participating in a [CRADA].'" Id. at 737 (quoting 15 U.S.C. § 3710a(c)(7)(A)); see also Demodulation, Inc. v. United States, 103 Fed. Cl. 794 (upholding subject matter jurisdiction over a patentee's claim against the government for a government contractor's breach of a CRADA which prohibited disclosure of the patentee's trade secrets and proprietary technology); D'Andrea Bros. LLC v. United States, 96 Fed. Cl. 205 (2010) (concluding that a CRADA was enforceable as a contract between the government and the private partner).

As these cases illustrate, Paragraph 3710a(c)(7) provides two distinct protections for qualifying information, which vary according to the source of the qualifying information. "[I]f qualifying information is obtained from the CRADA's private partner . . . it cannot be disclosed. However, if qualifying information is obtained from the agency and would have been protected if it had come from the private partner, the agency has the discretion to withhold it, but only for a five-year period." DeLorme, 917 F. Supp. at 872; see also ...