United States District Court, S.D. Texas, Houston Division
MEMORANDUM AND ORDER
Christina A. Bryan United States Magistrate Judge
matter is before the Court on Defendants' Motion for
Entry of Prosecution Bar (Dkt. 67). Having considered the
parties' submissions, argument of counsel at a hearing on
November 5, 2019, and the law, the Court grants the motion in
part and enters a more limited prosecution bar than that
sought by Defendants.
filed its Original Complaint in this action on June 25, 2019
asserting causes of action against Defendants for violation
of the Defend Trade Secrets Act, violation of the Texas
Uniform Trade Secrets Act, and breach of contract, and
seeking a temporary restraining order, a preliminary
injunction, a permanent injunction and damages. An expedited
trial is set for January 2020.
parties have exchanged, and continue to exchange, documents
that contain confidential technical information such as
product design drawings and specifications. An Agreed
Protective Order governs the production and disclosure of
confidential information in this case (Dkt. 19), but it does
not include a “prosecution bar, ” a type of
protective order that is “unique to patent law”
and therefore governed by Federal Circuit law. In re
Deutsche Bank Trust, Co., 605 F.3d 1373, 1377-78
(Fed. Cir. 2010). Inclusion of a prosecution bar in a
protective order may be necessary when “even the most
rigorous efforts of the recipient of [confidential]
information to preserve confidentiality . . . may not prevent
inadvertent compromise.” Deutsche Bank, 605
F.3d at 1378. Defendants seek a prosecution bar because
“[t]hrough discovery in this case, it has come to
[Defendants'] attention that [Plaintiff's] litigation
counsel are also [Plaintiff's] primary patent
counsel.” Dkt. 67 at 1. Plaintiff opposes entry of a
prosecution bar in any form.
initial matter, Plaintiff objects to the timing of
Defendants' motion. Plaintiff's counsel has already
received information designated “attorneys' eyes
only” pursuant to the Agreed Protective Order in this
case without being put to the choice of continuing to
represent Plaintiff in this litigation or continuing with
patent prosecution activities. While the timing of
Defendants' motion eliminates Plaintiff's ability to
choose the role it prefers for counsel, Plaintiff made a
choice to have patent prosecution counsel represent it in
this litigation despite the known risk presented by patent
prosecution work involving the same type of threaded
connections at issue in this suit. From the inception of this
fast-tracked case Plaintiff has been in a better position
than the Defendants to know the scope of its counsels'
patent prosecution activities. Plaintiff has cited no
authority, and the Court has found none, holding that a party
waives the right to seek a prosecution bar by not seeking it
in an initial agreed protective order. Therefore, the timing
of Defendants' motion does not preclude this Court's
consideration of the standards for prosecution bars under
Deutsche Bank and other relevant authorities and the
facts in the record.
Allocation of Burdens
explained in Eon Corp. IP Holdings, LLC v. AT & T
Mobility LLC, 881 F.Supp.2d 254, 256-56 (D.P.R. 2012),
district courts are split on how to allocate the burden of
proof when deciding a motion for entry of a prosecution bar.
Most courts apply a two-step inquiry: first the moving party
must show, on a counsel-by-counsel basis, an unacceptable
risk of inadvertent disclosure; and second the court must
balance that risk against the potential harm to the
non-movant. Id. at 255 and n.2 (gathering cases). A
minority of courts utilizes a different two-step inquiry:
first, the movant must show the prosecution bar is reasonable
given the information at issue, the scope of activities to be
barred and their subject matter, and the duration of the bar;
and second, the court weighs the need for the prosecution bar
“against the potential injury to the party deprived of
its counsel of choice.” Id. at 256 (citing
Applied Signal Tech., Inc. v. Emerging Mkts.
Commc'ns, Inc., No. 09-02180, 2011 WL 197811 (N.D.
Cal. Jan. 20, 2011)). The minority view shifts the burden to
the non-movant to seek, on a counsel-by-counsel basis, an
exemption to the bar. Id. One problem with the
majority view is that early in litigation it is unlikely that
the proponent of a prosecution bar has sufficient information
about opposing counsel's involvement in competitive
decision-making to show good cause. Id.
as the Court is aware, neither the Fifth Circuit nor district
courts in the Southern District of Texas have taken a side in
the split described above. In this case, as explained in more
detail below, the Court's conclusion is the same whether
the burden is on Defendants to show competitive
decision-making or on Plaintiff to show lack thereof.
is no dispute that Plaintiff has or expects to have patent
applications pending before the U.S. Patent Office regarding
threaded connections, and that two of Plaintiff's
litigation attorneys, C. Eric Hawes and Neil Ozarkar, have a
history of representing Plaintiff in the prosecution of
patent applications. The determination of an unacceptable
risk of inadvertent disclosure and the need for a prosecution
bar turns on the extent to which Hawes and Ozarkar are
involved in “competitive decision-making” in
connection with patent prosecutions for Plaintiff.
Deutsche Bank, 605 F.3d at 1378 (citing U.S.
Steel Corp. v. United States, 730 F.2d 1465, 1468 (Fed.
a party in patent prosecutions alone does not make counsel a
competitive decision-maker for purposes of a prosecution bar.
Deutsche Bank, 605 F.3d at 1379. Because of the
wide-range of patent prosecution activities, it is important
for the Court “to examine all relevant facts
surrounding counsel's actual preparation and prosecution
activities, on a counsel-by-counsel basis. Id. at
1380. The nature and extent of attorney involvement in
prosecution activities may fall into one of three categories:
1. Minimal attorney engagement in patent prosecution (by, for
example, “reporting office actions or filing ancillary
paperwork”) [which] gives rise to a ...