Superior Edge, Inc. v. Monsanto Co., Civil No. 12-2672 (JRT/FLN)
| Decision Date | 16 December 2014 |
| Docket Number | Civil No. 12-2672 (JRT/FLN) |
| Parties | SUPERIOR EDGE, INC., Plaintiff, v. MONSANTO COMPANY and SITE-SPECIFIC TECHNOLOGY DEVELOPMENT GROUP, INC., Defendants. |
| Court | U.S. District Court — District of Minnesota |
Walter Joseph Gates, III, WALTER J. GATES, III, P.A., First National Bank Minnesota Office Building, 510 Long Street, Suite 109, Mankato, MN 56001; and William G. Osborne, WILLIAM G. OSBORNE, P.A., 1305 East Robinson Street, Orlando, FL 32801, for plaintiff.
Dean B. Thomson, Lucas T. Clayton, and Richard G. Jensen, FABYANSKE WESTRA HART & THOMSON, PA, 333 South Seventh Street, Suite 2600, Minneapolis, MN 55402; and James F. Bennett, Jennifer S. Kingston, and Robert F. Epperson, Jr., DOWD BENNETT LLP, 7733 Forsyth Boulevard, Suite 1410, St. Louis, MO 63105, for defendant Monsanto.
This discovery dispute arises out of Plaintiff Superior Edge, Inc.'s ("SEI") allegations that Defendants Monsanto Company and Site-Specific Technology Development Group, Inc. ("SST") misappropriated SEI's intellectual property to create Monsanto's FieldScripts software. On July 15, 2014, United States Magistrate Judge Franklin L. Noel granted SEI's motion to compel production of the FieldScripts source code. Monsanto objected on July 30, 2014, arguing that additional protections wereneeded to protect its trade secrets. Monsanto also moved to reconsider on August 20, 2014, asking the Magistrate Judge to require that (1) the source code only be viewed on computers not connected to the Internet, (2) the source code be encrypted when not being analyzed, and (3) a third-party custodian secure the source code and monitor its access. The Magistrate Judge modified the order on September 11, 2014, granting Monsanto's request in part by restricting access to computers disconnected from the Internet and requiring encryption. However, the Magistrate Judge denied Monsanto's request for a third-party custodian. The parties have not objected to the order on Monsanto's motion to reconsider. Therefore, the only remaining issue for this Court is whether a third-party custodian should be required. Because Monsanto has not demonstrated that the current protective order is inadequate or that SEI's attorneys are likely to violate its terms, the Court overrules Monsanto's objection requesting a third-party custodian.
SEI commenced this litigation on October 19, 2012, following the termination of a Software Development and License agreement between the parties. Among other claims, SEI alleged that Monsanto and SST misappropriated SEI's intellectual property.
On September 16, 2013, the parties stipulated to a protective order to guard against disclosure of trade secrets. (See Stipulation for Protective Order, Sept. 25, 2013, Docket No. 69.) The stipulation included the right to designate documents as "Confidential - Attorneys' Eyes Only." (Id. ¶ 5.) Documents with an "Attorneys' Eyes Only" ("AEO") designation may not be viewed by the opposing parties themselves. Instead, they may only be viewed by the parties' attorneys, the Court, the Court's officers and reporters, authors of the document, and expert witnesses.2 (Id.) The documents may not be disclosed to an outside "person who is known to be an employee or agent of, or consultant to, any competitor of the party whose designated documents are sought to be disclosed" unless the producing party is given a fourteen-day notice and does not object. (See id. ¶ 7.) The protective order provides that "[a]ny party may apply to the Court for a modification of the Protective Order, and nothing in the Protective Order shall be construed to prevent a party from seeking such further provisions enhancing or limiting confidentiality as may be appropriate." (Id. ¶ 14.)
SEI served Monsanto with a request for production on October 2, 2013. (Monsanto's Mem. in Opp'n to Pl.'s. Mot. to Compel ("Mem. in Opp'n to Pl.'s Mot. to Compel") at 3, June 11, 2014, Docket No. 152.) The request included "[a]ny and allforms of the . . . source code . . . for the program or programs that at any time have been used or are currently being used to produce 'Fieldscripts' materials." (Monsanto's Objection to Magistrate Judge Order Requiring Production of Proprietary Source Code ("Objection"), Ex. 2 at 9, July 30, 2014, Docket No. 163-3.) Monsanto agreed to "produce documents . . . relating to the . . . source code" but resisted disclosing the source code itself. (See id.) When SEI moved to compel production of the source code, Monsanto argued that the information was too sensitive to be sufficiently protected by an AEO designation and that its discovery was unnecessary. (Mem. in Opp'n to Pl.'s Mot. to Compel at 16 n.8.) The Magistrate Judge ordered Monsanto to produce the source code, expressing "confiden[ce] that the current Protective Order already in place is sufficient to ensure the confidentiality of this highly sensitive information and that the parties will respect any 'Attorneys' Eyes Only' designation." (Order at 4, July 15, 2014, Docket No. 160.)
Monsanto objected to whether "an AEO designation provides sufficient protection for the Source Code." (Objection at 4.) In particular, Monsanto was concerned that SEI's attorneys would disclose the source code, advertently or inadvertently, or that it would fall into the hands of hackers. (Id. at 11.) Monsanto requested three additional protections: (1) that the source code may not be viewed on computers connected to the Internet, (2) that the source code must be encrypted when not being analyzed, and (3) that a third-party custodian secure the source code and monitor its access. (Id. at 4.) SEI argued that the protective order stipulated by the parties, particularly the AEO designation, was sufficient to protect the source code and that the use of a third-partycustodian would be burdensome and likely result in further discovery disputes. (SEI's Resp. to Monsanto's Objection to Magistrate Judge Order Requiring Production of Proprietary Source Code at 9-11, Aug. 13, 2014, Docket No. 165.)
In addition to objecting, Monsanto moved for reconsideration, requesting that the Magistrate Judge incorporate the same three protections requested in the objection. (Monsanto's Mem. in Supp. of Mot. for Reconsideration ("Mem. in Supp. of Mot. for Reconsideration") at 2, Aug. 20, 2014, Docket No. 167.) The Magistrate Judge granted Monsanto's request in part, requiring that computers used to view the source code be disconnected from the Internet and that the code be encrypted when not being analyzed. (Order on Mot. to Reconsider at 1, Sept. 11, 2014, Docket No. 185.) However, the order denied Monsanto's request for a third-party custodian. (Id. at 2.) The parties have not objected to the two new protections in the order on Monsanto's motion to reconsider. Therefore, only the request for a third-party custodian remains in dispute.
A magistrate judge has broad discretion over matters of discovery. Shukh v. Seagate Tech., LLC, 295 F.R.D. 228, 238 (D. Minn. 2013). A district court's review of a magistrate judge's order on a nondispositive matter is "extremely deferential." Roble v. Celestica Corp., 627 F. Supp. 2d 1008, 1014 (D. Minn. 2007); see also United States v. Raddatz, 447 U.S. 667, 673 (1980). The Court will reverse such an order only if it is clearly erroneous or contrary to law. See 28 U.S.C. § 636(b)(1)(A); Fed. R. Civ. P. 72(a);D. Minn. LR 72.2(a)(3). For an order to be clearly erroneous, the district court must have a "definite and firm conviction that a mistake has been made." Lisdahl v. Mayo Found., 633 F.3d 712, 717 (8th Cir. 2011) (quoting Anderson v. Bessemer City, 470 U.S. 564, 573 (1985)).
Monsanto argues that the Magistrate Judge's order compelling production of the source code was clearly erroneous because (1) the source code is uniquely valuable and (2) additional protections would not cause prejudice to SEI. (Objection at 4.) Monsanto only objects to the Magistrate Judge's discovery order on the "discrete point" whether "an AEO designation is sufficient to ensure the confidentiality of the Source Code." (Id. at 12-13.) Specifically, Monsanto argues that a third-party custodian is necessary to protect its product.
To determine the appropriate level of protection for a trade secret, a court must weigh the moving party's need for the information against the injury that might be caused to the non-moving party by disclosure. In re Remington Arms Co., Inc., 952 F.2d 1029, 1032 (8th Cir. 1991). The potential for injury may be mitigated by an appropriate protective order. See Minn. Mining & Mfg. Co. v. Nippon Carbide Indus. Co., 171 F.R.D. 246, 250 (D. Minn. 1997) (); see also Fair Isaac Corp. v. Equifax, Inc., No. 06-4112, 2007 WL 2791168, at *5 (D. Minn. Sept. 25, 2007) ().
The Magistrate Judge correctly concluded that SEI has demonstrated a need for the FieldScripts algorithm and source code. SEI's complaint alleges that Monsanto and SST "reverse engineered" FieldScripts from SEI's intellectual property. (Second Am. Compl. ¶ 70.) Thus, SEI seeks the FieldScripts source code to have an expert witness compare it to SEI's software code. (See Mem. of Law in Supp. of Mot. to Compel Monsanto's Production of Documents at 14, May 27, 2014, Docket No. 141.) A direct comparison of the code may be essential to proving or disproving SEI's claim that FieldScripts was produced by reverse engineering SEI's intellectual...
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