In Re Deutsche Bank Trust Company Americas

• Decision Date: 27 May 2010
• Docket Number: Misc. No. 920.
• Citation: 605 F.3d 1373
• Parties: In re DEUTSCHE BANK TRUST COMPANY AMERICAS and Total Bank Solutions, LLC, Petitioners.
• Court: U.S. Court of Appeals — Federal Circuit

605 F.3d 1373

In re DEUTSCHE BANK TRUST COMPANY AMERICAS and Total Bank Solutions, LLC, Petitioners.

Misc. No. 920.

United States Court of Appeals Federal Circuit.

May 27, 2010.

COPYRIGHT MATERIAL OMITTED

Before MICHEL, Chief Judge, LINN, and PROST, Circuit Judges.

ON PETITION FOR WRIT OF MANDAMUS

LINN, Circuit Judge.

ORDER

Deutsche Bank Trust Company Americas and Total Bank Solutions, LLC (collectively, “Deutsche”) petition for a writ of mandamus directing the United States District Court for the Southern District of New York to vacate its order exempting Charles Macedo (“Macedo”), the lead litigation counsel of Island Intellectual Property LLC, LIDS Capital LLC, Double Rock Corporation, and Intrasweep LLC (collectively, “Island”) from the patent prosecution bar applied to other litigation counsel for Island in the case. Island Intellectual Prop., LLC v. Deutsche Bank AG, 658 F.Supp.2d 615 (S.D.N.Y.2009) ( “ Opinion ”). Island opposes.

Because this petition presents an important issue of first impression in which courts have disagreed, we grant-in-part Deutsche's petition to vacate the district court's order, and remand the case to the district court for reconsideration of its order under the standards articulated herein.

I

This petition stems from a patent infringement suit filed in the Southern District of New York by Island asserting three patents relating to financial deposit-sweep services: U.S. Patents No. 7,509,286, No. 7,519,551, and No. 7,536,350. All three of the asserted patents resulted from continuation-in-part applications filed from a common parent application, now U.S. Patent No. 6,374,231. Island also has nineteen pending applications related to this family of patents through continuations and continuations-in-part. At least fifteen of these applications are unpublished.

On August 19, 2009, Deutsche sought a protective order including a patent prosecution bar preventing anyone who gains access in the litigation to documents marked “confidential-patent prosecution bar” from any involvement in prosecuting any patent in the area of “deposit sweep services” during, and for a limited period after, the conclusion of this litigation. After a very short hearing, and without a written opinion, the magistrate judge assigned to the case granted Deutsche's request as to all of Island's trial counsel, but exempted Macedo, Island's lead trial counsel.

Deutsche moved to reconsider the magistrate judge's order. After full briefing on the issue, Deutsch's motion was denied. Island Intellectual Prop., LLC v. Deutsche Bank AG, No. 09-CV-02675 (S.D.N.Y. Sept. 23, 2009) (“ Reconsideration Order ”). Deutsche then filed objections to the magistrate judge's order with the district court. Pending the district court's decision, the magistrate judge issued an interim protective order containing a patent prosecution bar (“Interim Protective Order”). Island Intellectual Prop., LLC v. Deutsche Bank AG, No. 09-CV-02675, 2009 WL 4705306 (S.D.N.Y. Oct. 23, 2009) (“ Interim Order ”). The Interim Protective Order gave Macedo the choice of either not reviewing the applicable confidential material or being barred from prosecuting patents pertaining to financial services involving sweep functions. Specifically, the Interim Protective Order identifies the information that triggers a bar as follows:

The designation “CONFIDENTIAL-PATENT PROSECUTION BAR” may be applied by a party to information of the type that can be included in a patent application and form the basis or part of the basis for a claim or claims thereof, which it believes in good faith to constitute confidential or trade secret information, the disclosure of which to a person engaged in or otherwise assisting in patent prosecution in the technical areas to which the information relates would create a substantial risk of injury to the disclosing party.

Id. at 2.

The Interim Protective Order describes the extent of the bar as follows:

No individual that receives information designated “CONFIDENTIAL-PATENT PROSECUTION BAR” shall give advice or participate, supervise or assist in the prosecution of patents pertaining to financial services involving sweep functions during the pendency of the present action and for one calendar year after the conclusion of the present litigation, including any appeals.

Id. at 5.

The district court, on review, held that the magistrate judge's reconsideration order was not clearly erroneous or contrary to law and adopted it in its entirety. Opinion at 621. The district court ordered that the Interim Protective Order would be lifted on November 25, 2009. However, this order was temporarily stayed to allow Deutsche to seek an emergency stay in this court. This petition followed, which automatically lifted the temporary stay. Deutsche also filed an emergency motion requesting a further stay, pending appeal, of the district court's order to lift the Interim Protective Order. We granted Deutsche's motion.

II

The remedy of mandamus is available only in extraordinary situations to correct a clear abuse of discretion or usurpation of judicial power. See In re Regents of the Univ. of Cal., 101 F.3d 1386, 1387 (Fed.Cir.1996). A party seeking a writ bears the burden of proving that it has no other means of obtaining the relief desired Mallard v. U.S. Dist. Court for S. Dist. of Iowa, 490 U.S. 296, 309, 109 S.Ct. 1814, 104 L.Ed.2d 318 (1989), and that the right to issuance of the writ is “clear and indisputable,” Allied Chemical Corp. v. Daiflon, Inc., 449 U.S. 33, 35, 101 S.Ct. 188, 66 L.Ed.2d 193 (1980).

Final decisions concerning discovery matters are reviewed by this court under the abuse of discretion standard. Cygnus Therapeutics Sys. v. ALZA Corp., 92 F.3d 1153, 1161 n. 2 (Fed.Cir.1996); Heat & Control, Inc. v. Hester Indus., Inc., 785 F.2d 1017, 1022 (Fed.Cir.1986). Although rare, it is not impossible to grant the remedy of mandamus where a matter under review is committed to the district court's discretion. See Allied Chem., 449 U.S. at 36, 101 S.Ct. 188 (stating that mandamus is “hardly ever” available in cases where the district court's decision is a matter of discretion). Specifically, we have granted mandamus review of discovery orders when the petition presented an important issue of first impression or one in which courts have disagreed. See, e.g., In re United States, 590 F.3d 1305, 1308 (Fed.Cir.2009); In re Seagate Tech., LLC, 497 F.3d 1360, 1367 (Fed.Cir.2007) (en banc); Regents of the Univ. of Cal., 101 F.3d at 1387.

III

As a threshold issue, we address whether to apply Second Circuit law or Federal Circuit law to the question before us. “[W]e have generally deferred to regional circuit law when the issue involves an interpretation of the Federal Rules of Civil Procedure.” Manildra Milling Corp. v. Ogilvie Mills, Inc., 76 F.3d 1178, 1181-82 (Fed.Cir.1996). However, we have also held that Federal Circuit law applies to discovery matters if the determination implicates an issue of substantive patent law. Advanced Cardiovascular Sys., Inc. v. Medtronic, Inc., 265 F.3d 1294, 1307-08 (Fed.Cir.2001); In re Spalding Sports Worldwide, Inc., 203 F.3d 800, 803 (Fed.Cir.2000). In deciding which law to apply, we consider several factors including: “the uniformity in regional circuit law, the need to promote uniformity in the outcome of patent litigation, and the nature of the legal issue involved.” Manildra Milling, 76 F.3d at 1181.

A determination of whether a trial lawyer should be denied access to information under a protective order because of his additional role in patent prosecution, or alternatively be barred from representing clients in certain matters before the U.S. Patent and Trademark Office (“PTO”), is an issue unique to patent law. Moreover, and as discussed below, there is a noted lack of uniformity among district courts around the country about whether and under what circumstances a patent prosecution bar should be applied. See generally David Hricik How Things Snowball: The Ethical Responsibilities and Liability Risks Arising from Representing a Single Client in Multiple Patent-Related Representations, 18 Geo. J. Legal Ethics 421, 442 (2005) (stating that the question of whether attorneys who prosecute patents may be barred from access to certain sensitive discovery “has split the courts”). Applying regional circuit law to this question is likely to produce differing results depending on the regional circuit in which the case originated. See Highway Equip. Co., Inc. v. FECO, Ltd., 469 F.3d 1027, 1032 (Fed.Cir.2006) (finding that Federal Circuit law, as opposed to Eighth Circuit law, applied to what effect a dismissal with prejudice has on the legal requirements under 35 U.S.C. § 285 because otherwise the law might vary by regional circuit). Given the unique relationship of this issue to patent law, and the importance of establishing a uniform standard, we hold that the determination of whether a protective order should include a patent prosecution bar is a matter governed by Federal Circuit law.

IV

A

A party seeking a protective order carries the burden of showing good cause for its issuance. See Fed.R.Civ.P. 26(c); Truswal Sys. Corp. v. Hydro-Air Eng'g, Inc., 813 F.2d 1207, 1209-10 (Fed.Cir.1987). The same is true for a party seeking to include in a protective order a provision effecting a patent prosecution bar. Typically, protective orders include provisions specifying that designated confidential information may be used only for purposes of the current litigation. Such provisions are generally accepted as an effective way of protecting sensitive information while granting trial counsel limited access to it for purposes of the litigation. Courts have recognized, however, 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...