Protective Orders and Joint Defense Agreements

by Dennis Crouch

Static Media LLC v. Chief Equipment LLC and Jen-Feng (Jeff) Lee (Fed. Cir. 2022)

Back again in 2018, Static Media sued Leader Extras in W.D. Wisconsin for infringing its U.S. Structure Patent D771,400, masking an ornamental style and design for a stadium seat.  The situation finished with a summary judgment of non-infringement. The district courtroom identified a huge quantity of related prior artwork patterns and so narrowly construed the likely infringement window.  The district courtroom then walked-by means of a range of variances that would preclude a discovering of significant similarity, including the quilted vertical columns, variation in the reduced part of the again (straight vs sloping at the edges) narrower seat cushion unique storage panel with two pockets etcetera.

Parallel Instances and a JDA: Though the Leader case was ongoing, Static Media also threatened and then sued OJ Commerce for infringing the similar patent.  The two defendants – Chief and OJ – entered into a Joint Protection Agreement (JDA) for the reason of generating a popular protection in the two situations with Jeff Lee representing Chief and Sam Hecht representing OJ.

The Wisconsin case was topic to a confidentiality agreement/purchase.  Lee wished to send out some private scenario documents to Hecht.  But, ahead of carrying out so, to start with had Hecht signal the confidentiality arrangement. At that place, Lee despatched around some deposition transcripts as effectively as prior licensing/revenue data from the patentee.  In accordance to the court “[o]nly a couple of the internet pages in these files were marked private, the relaxation were being not.”

Hecht (OJ’s legal professional) afterwards employed the private documents from the Leader case in license negotiations.  Static Media’s lawyers had been upset at this info sharing and petitioned for sanctions.  The Wisconsin justice of the peace and district court docket agreed and concluded Lee’s disclosures to Hecht ended up in violation of the protective purchase.  In individual, the protecting get limited the use of confidential facts: “solely for the uses of this motion.” I.e., private disclosures in Static v. Chief could only be made use of for Static v. Chief.  The court docket purchased a sanction underneath R. 37 of $1,000 as well as $10,500 in legal professional expenses.

On attraction, a divided Federal Circuit panel has reversed–finding a “fair floor of doubt as to the wrongfulness” of the carry out.  Quoting Cal. Synthetic Stone Paving Co. v. Molitor, 113 U.S. 609, 618 (1885).

Two theories of contempt:

1. Theory 1: When Lee disclosed the substance to Hecht, Lee knew (or really should have regarded) that Hecht would use it in the OJ situation.  On attraction, the Federal Circuit observed this idea lacked evidentiary aid.  The court docket particularly pointed to Lee’s requests that Hecht indicator and then comply with the confidentiality agreement. “Mr. Lee had Mr. Hecht indication the Written Assurance, and with each and every disclosure, Mr. Lee reminded Mr. Hecht of the obligations the protective order imposed on his use of the private information and facts.” Slip Op.
2. Theory 2: Even while Hecht signed the settlement, disclosure to Hecht for the needs of a JDA was incorrect. On charm though, the Federal Circuit identified centered on the intent of the agreement — to protect against community disclosure or disclosures that would area the functions at a aggressive disadvantage. The appellate panel then observed that a Joint Protection Arrangement does not frustrate that purpose.

The the vast majority feeling was authored by Decide Dyk and joined by Decide Taranto.  Decide Reyna wrote in dissent — concluding that the vast majority failed to give the district court’s sanctions order enough deference.