YellowCake, Inc. v. DashGo, Inc. ( 2022 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 YELLOWCAKE, INC., a California No. 1:21-cv-00803-AWI-BAM corporation, 12 ORDER GRANTING MOTION FOR ENTRY OF Plaintiff, A TWO-TIER PROTECTIVE ORDER 13 14 v. (Doc. 41) DASHGO, INC., a Delaware corporation, 15 ORDER DENYING AWARD OF FEES and AUDIOMICRO, INC. d/b/a ADREV, a 16 Delaware corporation, 17 Defendants. 18 19 Currently before the Court is the motion for entry of a two-tier protective order filed by 20 Defendants’ Dashgo, Inc. (“Dahsgo”) and Audiomicro, Inc. d/b/a Adrev (“Adrev”) (collectively 21 “Defendants”) on March 25, 2022. (Doc. 41.) By the motion, Defendants seek entry of a two-tier 22 protective order, which includes a “HIGHLY CONFIDENTIAL - ATTORNEYS’ EYES ONLY” 23 (“AEO”) designation. The parties filed a Joint Statement Re: Discovery Disagreement Re: Two- 24 Tier Protective Order, and the instant motion has been taken under submission. (Doc. 64.) 25 Having considered the parties’ arguments, and for the reasons discussed below, the Court 26 finds entry of a two-tier protective order appropriate, and Defendants’ motion will be granted. 27 Given the nature of disagreement, the Court also addresses the disputed categories of documents 28 1 and information identified by the parties and delineates the documents and information subject to 2 the two-tier protective order. 3 I. Factual and Procedural Background 4 A. Factual Overview1 5 Plaintiff Yellowcake, Inc. (“Plaintiff” or “Yellowcake”) initiated this copyright action on 6 May 17, 2021. (Doc. 1.) The action stems from the alleged improper infringement by 7 Defendants of hundreds of domestic and foreign copyrighted works owned by Yellowcake. 8 Plaintiff also names as defendants Benjamin Patterson, president of Dashgo, and Noah Becker, 9 president of Adrev. Patterson reports to Becker and Adrev. Adrev and Becker dictate Dashgo’s 10 business strategy and actions. 11 Yellowcake and its predecessors-in-interest have always owned the exclusive copyrights 12 in One Thousand Six Hundred and Seventy-Two (1,672) of Yellowcake’s copyrighted sound 13 recordings (“Copyrighted Works”) and Three Hundred Sixty-Three (363) foreign copyrighted 14 works (“Foreign Works”). (Doc. 31, Second Amended Complaint (“SAC”) ¶¶1, 2.)2 Plaintiff 15 alleges that Defendants exploited Yellowcake’s Copyrighted Works and Foreign Works by, inter 16 alia, the unauthorized sale, distribution, reproduction, synchronization, creation of derivative 17 works, and public performance thereof via digital transmission on online platforms, including 18 Amazon Music (“Amazon”) and www.YouTube.com (“YouTube”). (SAC ¶3.) 19 Yellowcake or its predecessors have registered with the United States Copyright Office 20 the Copyrighted Works and received Certificates of Registration for each sound recording. 21 Yellowcake acquired all of its predecessors-in-interest’s rights associated with the Copyrighted 22 Works. The Foreign Works were duly registered in Mexico, which is the country of first 23 publication. Yellowcake acquired all of its predecessors-in-interest’s rights associated with the 24 Foreign Works. The Foreign Works are subject to copyright protection in the United States 25 1 The factual background is generally taken from the Second Amended Complaint. (Doc. 31.) 26 2 In contrast to the allegations in the SAC, the First Amended Complaint (“FAC”) alleged 27 infringement of 165 domestic copyrighted sound recordings and 1,075 foreign copyrighted sound recordings. (See Doc.1 ¶¶1,2; Doc. 30, p. 3 (Order on Defendants Motion to Dismiss)). All page 28 numbers are to the Court’s CM/ECF page number. 1 pursuant to The Berne Convention for the Protection of Literary and Artistic Works and the 2 Copyright Act of 1976, as amended. Yellowcake is the exclusive owner of all rights in the 3 Copyrighted Works and the Foreign Works, including the exclusive rights to sell, distribute, and 4 publicly perform those works. (SAC ¶¶25-30.) 5 Dashgo sells and distributes music throughout the world using internet distribution and 6 retail channels. (SAC ¶12.) Adrev performs business, administrative, distribution, and 7 technological functions in connection with Dashgo’s business operations. Dashgo is a wholly 8 owned subsidiary of Adrev. 9 Colonize Media, Inc. (“Colonize”) is Yellowcake’s agent and distributor; and Yellowcake 10 has authorized Colonize Media to be its exclusive distributor. Previously, Dashgo had a 11 contractual right to exploit Yellowcake’s Copyrighted Works and the Foreign Works pursuant to 12 two since-terminated written distribution agreements: one between Dashgo and DH1 Media, the 13 predecessor of Yellowcake’s current distributor, Colonize, and one between Dashgo and MAR 14 International Records, Inc. (“the MAR Agreement”), a predecessor-in interest in a number of 15 Yellowcake’s Copyrighted Works and Foreign Works. (SAC ¶ 35.) Yellowcake alleges both of 16 these distribution agreements were validly terminated under the terms of those agreements after 17 Yellowcake had acquired the exclusive ownership of all rights in the Copyrighted Works and the 18 Foreign Works. (SAC ¶36.) Defendants Dashgo, Patterson, Adrev and Becker acknowledged in 19 writing that both the Colonize Agreement and the MAR Agreement were validly terminated in 20 writing and that Dashgo would cease distributing the Copyrighted Works and the Foreign Works. 21 (SAC ¶39.) 22 Yellowcake did not enter into another distribution agreement with Dashgo or otherwise 23 authorize Dashgo or Patterson to continue distributing or exploiting any of Yellowcake’s 24 Copyrighted Works or Foreign Works after the termination of the distribution agreements. 25 Whatever rights Dashgo may have had in the Copyrighted Works and Foreign Works no longer 26 exist, and Dashgo did not obtain any valid rights to exploit Yellowcake’s Copyrighted Works or 27 Foreign Works from any third party. (SAC ¶¶41-42.) 28 Despite the termination of the two distribution agreements, Dashgo and Patterson started 1 distributing and exploiting of Yellowcake’s Copyrighted Works and Foreign Works again without 2 authorization from Yellowcake. Yellowcake, through Colonize, notified Dashgo, Patterson, 3 Adrev, and Becker of Dashgo’s unauthorized distribution and exploitation of Yellowcake’s 4 Copyrighted Works and Foreign Works. (SAC ¶¶44-45.) As an example, Dashgo and Patterson 5 allegedly copied and then synchronized a copyrighted sound recording to an audiovisual work, 6 and then uploaded the new video to one of Dashgo’s channels on www.YouTube.com. (SAC 7 ¶46.) In other instances, Dahsgo and Patterson copied and then sold some Copyrighted Works 8 and Foreign Works directly to purchasers through Amazon. (SAC ¶¶49-52.) 9 B. Discovery Disputes 10 This case, even though in the early stages, has had numerous discovery disputes, many of 11 which remain pending. On April 6, 2022, the Court held a status conference on several 12 discovery motions. The Court determined that the parties had not adequately met and conferred, 13 vacated the hearing date on the discovery motions, and set a further status conference. The parties 14 were to complete substantive meet and confer and, if they were unable to reach an agreement, 15 then the Court indicated its intention to set a briefing schedule and hearing date on the remaining 16 issues. (Doc. 52.) 17 On April 8, 2022, Defendant Dashgo filed an ex parte application for an order directing 18 Plaintiff’s counsel to withdraw subpoenas to third parties Amazon.com and YouTube, Inc. or, in 19 the alternative, staying enforcement of the subpoenas. (Doc. 50.) 20 On April 11, 2022, the Court stayed all discovery, but instructed the parties to continue meet 21 and confer efforts on all motions, including the ex parte application, and be prepared to present a 22 discovery plan at the next status conference. On May 17, 2022, the Court held a status conference. 23 The Court set a briefing schedule on Defendants’ motion for two-tier/AEO protective order. The 24 parties represented that they had narrowed the issue related to the protective order and would submit 25 limited briefing as to that issue.3 Discovery remained stayed pending resolution of the motion for 26 3 While the parties represented that they had narrowed the issue related to the protective order, the 27 Joint Statement, nonetheless, consists of about 50 pages of briefing and over 400 pages of exhibits. At the status conference on June 9, 2022, the Court admonished the parties against 28 unnecessarily burdening the Court’s limited resources. 1 entry of protective order. At a status conference on June 9, 2022, the Court lifted the stay, except 2 for discovery implicating the two-tier/AEO protective order. 3 II. Motion for Protective Order 4 Defendants filed the instant motion for entry of a two-tier protective order on March 25, 5 2022. (Doc. 41.) On June 3, 2022, the parties filed their Joint Statement of Discovery 6 Disagreement. (Doc. 64.) The parties indicate that the only contested issue is whether the Court 7 should enter a two-tier protective order. However, the underlying dispute centers on whether 8 Plaintiff’s discovery seeks disclosure of Defendants’ proprietary and highly sensitive documents 9 or information or trade secrets. Defendants believe a two-tier/AEO protective order is necessary 10 so that they may avoid significant financial or competitive harm and disadvantage by disclosing 11 such sensitive information in discovery. 12 A. Defendants’ Position 13 Defendants bring this motion because Yellowcake and its affiliate (and exclusive 14 licensee), Colonize, are direct competitors of Dashgo in the digital music distribution industry. 15 Both Dashgo and Yellowcake distribute their respective clients’ content to the same content 16 delivery services such as Spotify, Apple Music, YouTube and others. (Doc. 64, p. 74, Patterson 17 Decl. ¶18.) Colonize’s website and Dashgo’s website target the same potential clients and offer 18 similar services: strategies for reaching fan targets for artists, songwriters, creators and others. 19 (Patterson Decl. ¶19.) 20 Defendants believe Plaintiff should not need Defendants’ proprietary and highly sensitive 21 documents or information or trade secrets in this case. Dashgo has, over the years, and at large 22 investment, developed a unified, industry leading software program that enables its clients to 23 manage their content. (Patterson Decl. ¶ 23.) Because the digital music distribution industry is so 24 competitive, digital music distributors are very protective of their trade secrets, customer lists, 25 proprietary systems and software, and other such proprietary and confidential information. 26 (Patterson Decl. ¶ 24.) 27 Underlying the instant motion for a two-tier protective order is Yellowcake’s Requests for 28 Production of Documents, Set One (“RPD”) and First Set of Interrogatories to Defendants 1 (“Interrogatories Set One”). As an initial matter, Defendants claim Yellowcake’s RPD is 2 overbroad for two main reasons: First, the FAC has been superseded by the SAC, which lists an 3 entirely different set of copyrighted works, and the definitions in the RPD are obsolete.4 Second, 4 Yellowcake’s SAC identifies sound recordings by artist and title. Sound recordings cannot solely 5 be identified by artist name and title, or even by copyright registration number rather, each unique 6 sound recording can be referenced by an International Standard Recording Code (“ISRC”), a 12- 7 character, alphanumeric code that is assigned to a piece of music set for commercial release. An 8 artist can rerecord and license different versions of the same sound recording. The same artist can 9 rerecord a song multiple times even though each iteration bears the same title. Thus, a list of artist 10 names and titles are overbroad, vague and ambiguous.5 11 Further, Defendants contend that the RPD seek sensitive documents in the following 12 categories: (1) Dashgo’s agreements with DSPs [digital service providers like iTunes, Spotify, 13 YouTube, etc.]; (2) Dashgo’s agreements with third party licensors (content owners, artists and 14 record labels), including those licensors that claim rights to different iterations of any of 15 “Yellowcake’s Copyrighted Works” or “Foreign Works”; (3) documents containing one, some or 16 all of Dashgo’s existing clients and contacts; (4) documents reflecting Dashgo’s internal 17 4 The Court agrees. Plaintiff’s RPD and Interrogatories Set One both incorporate the same 18 definitions of “Yellowcake’s Copyrighted Works” and the “Foreign Works” as set forth in the 19 FAC, but not the definitions set forth in the SAC. The definitions in the FAC of Copyrighted Works and Foreign Works are different from the definitions in the SAC. Any RPD based upon 20 terminology or allegations in the FAC are superseded by the SAC. However, the Court understands that Plaintiff has recently provided a “list” of copyrighted works (both domestic and 21 foreign) that Plaintiff contends Defendants infringed. The parties are directed to meet and confer to identify the list and which definitions will be used for responding to the RPD and 22 Interrogatories Set One. The Court will not enforce a request or interrogatory that contains 23 superseded definitions. 24 5 Yellowcake’s position is that identification by title is sufficient. (Doc. 64 p. 41, n.10 (“Both Yellowcake and Yellowcake’s predecessor-in-interest were under contract with Dashgo to 25 distribute the sound recordings at issue in this action and, thus, Dashgo already knows the specific ISRC for each sound recording claimed by Yellowcake.”) Yellowcake contends it is not obligated 26 to provide recordings identified by ISRC. Dashgo was contracted to distribute Yellowcake’s 27 sound recordings and Dashgo knows the specific ISRC. See Exh. 17 (p. 465) (Dashgo royalty report which identifies ISRC of Yellowcake’s recordings claimed by Yellowcake). According to 28 Dashgo, Yellowcake thereafter provided a specific list of sound recordings. 1 procedures and processes and other proprietary commercial information; (5) documents 2 containing financial information relating to Dashgo’s clients, business operations, performance 3 and profitability; and (6) documents that pertain to highly proprietary software and systems that 4 Dashgo has developed. (Doc. 64 p.12, 18-19.) Because Yellowcake’s discovery seeks sensitive 5 and confidential information, Dashgo wants to designate these documents as AEO under the 6 proposed protective order. Defendants argue that wholesale disclosure to a competitor will 7 expose Dashgo and its business relationships to competitive harm. 8 Defendants contend good cause exists for a two-tier/AEO protective order for multiple 9 reasons. First, Yellowcake agreed to a two-tier protective order in the parties’ joint scheduling 10 report. (Doc. 14.) Second, Yellowcake, as a digital music distributor, is a direct competitor of 11 Dashgo. (Doc. 64, p. 16.) Yellowcake’s exclusive licensee, Colonize, also is a direct competitor 12 of Dashgo, and Colonize and Yellowcake have overlapping principals. Id. Third, and critically, 13 Yellowcake’s RPD and Interrogatories Set One seek sensitive and confidential documents and 14 information, including highly sensitive documents and information of third parties that are clients 15 of Dashgo or Adrev. (Doc. 64 p. 21.) 16 Defendants request an award of attorney’s fees if the motion is granted. 17 B. Plaintiff Yellowcake’s Position 18 Yellowcake counters that Defendants have failed to show that good cause exists for a two- 19 tier/AEO protective order. Yellowcake makes the following arguments against a two-tier/AEO 20 protective order: Yellowcake never agreed to a two-tier/AEO protective order; Yellowcake is not 21 a competitor of Defendants; this case does not involve trade secrets or patents; Yellowcake will 22 be prejudiced if its Principal, Kevin Berger, cannot review financial documents related to the 23 revenue Defendants received; counsel cannot adequately assess AEO-produced information 24 without necessary input from others; Defendants cite to broad categories of potential documents; 25 Defendants’ assertion the RPD call for production of sensitive documents is an overbroad 26 interpretation of Yellowcake’s discovery demands; and Defendants have already disclosed 27 documents they now deem sensitive. (Doc. 64, p. 25-26.) 28 Yellowcake generally contends that Defendants have failed to explain why production of 1 correspondence and confidential documents requires a two-tier protective order. The proposed 2 two-tier protective order comes from the Northern District of California and is intended for use in 3 patent and trade secret cases, but this case concerns only copyrighted music, not patents or trade 4 secrets. Yellowcake asserts that the only relevant information that may even remotely be deemed 5 “confidential” is financial information relating to the income received by Defendants from the 6 unauthorized exploitation of Yellowcake’s copyrighted works. But this income goes to 7 Yellowcake’s copyrights, and Yellowcake contends is entitled to receive this information. 8 Yellowcake believes the request for a two-tier/AEO protective order is a delay tactic and 9 complains that Defendants continue to withhold production of documents, such as 10 correspondence, regardless of the content, until Yellowcake agrees to the two-tier protective 11 order. Some documents were produced in early April 2022, but most were irrelevant and still 12 withheld documents. Defendants also have not provided any substantive answer to 13 interrogatories unless Yellowcake agrees to an inappropriate two-tier order.6 14 Yellowcake insists that it never agreed to the type of two-tier/AEO protective order 15 proposed here. Instead, Yellowcake believed it was agreeing to a two-tier designation of 16 “CONFIDENTIAL” versus “NON-CONFIDENTIAL.” (Doc. 64 p. 33.) 17 According to Yellowcake, Defendants intend on designating significant documents as 18 AEO because Mr. Berger is also a shareholder of Colonize which is a competitor of Defendant 19 Dashgo. Yellowcake will have to make a motion to challenge such designations because it has 20 not asked for documents that could give Yellowcake a competitive advantage if viewed by Mr. 21 Berger. Yellowcake posits that if there are certain financial terms in third-party contracts that 22 6 The Court has reviewed, briefly, the response by Defendants to the RPD. Much of the response 23 consists of what the Court characterizes as boilerplate objections. Boilerplate objections are not appropriate, and a party's objections should be specific and supported by evidence if challenged. 24 See Fed. R. Civ. P. 34(b)(2); Bragel Intl., Inc. v. Kohl's Dept. Stores, 2018 WL 7890682, at *5 (C.D. Cal. Nov. 14, 2018); Peck v. Cty. of Orange, No. 2:19-CV-04654 DS FAF MX, 2020 WL 25 4218223, at *3 (C.D. Cal. July 10, 2020) (boilerplate “General Objections” are inappropriate and overruled.) Once the parties have met and conferred on the “list” of Copyrighted Works and 26 Foreign Works at issue in this case, as discussed infra, Defendants are required to supplement 27 their responses to the RPD and Interrogatories Set One to eliminate boilerplate objections to the discovery requests. 28 1 Defendants are concerned about, then those terms could be redacted subject to a standard 2 privilege log. Yellowcake also contends that Defendants have not identified what documents that 3 they have in their possession that are highly confidential or trade secrets and why it would be a 4 problem if Mr. Berger were to see them. 5 Yellowcake asserts that Defendants have not met their heavy burden to show good cause 6 for the extraordinary relief of an AEO designation or demonstrated that there are no other 7 alternatives to an AEO designation. It is not seeking any of the six categories of documents7 8 identified by Defendants above and believes that a compromise could be made by using 9 redactions. 8 (Doc. 64, p.37.) 10 Yellowcake further asserts that it will be prejudiced by a two-tier protective order. In 11 particular, Yellowcake avers that an AEO designation should be reserved for only rare instances 12 where it is truly justified, citing out of district authority. (Doc. 64 p. 37.) Trial preparation and 13 trial are made more difficult and expensive if an attorney cannot make complete disclosures of the 14 facts to the client. AEO designation of financial information from exploitation of Yellowcake’s 15 work also will interfere with Yellowcake’s ability to prepare damages. While Defendants claim 16 the need for a two-tier protective order to “cover sweepingly broad categories” of “non-descript 17 documents,” (Doc. 64 p. 39), Yellowcake points out that Defendants do not identify what 18 documents are so highly sensitive that a general “confidentiality” designation is not sufficient, 19 given this dispute involves recording and revenue generated, not copyrighted software. 20 With regard to the six categories of documents relied on by Defendants to support their 21 request for two-tier/AEO protective order, Yellowcake disputes Defendants’ broad 22 characterization of those requests, arguing that discovery is narrowly tailored to Yellowcake’s 23 24 7 Plaintiff contends that not until the filing of this motion did Dashgo identify these categories of documents. (Doc. 64, p. 37 (“after Defendants had filed the instant motion for a protective order 25 Defendants, for the first time, identified six categories of documents in their joint statement that they claim are sensitive and shall be subject to a Two-Tier order.”)) 26 27 8 For instance, Yellowcake contends Dashgo, as a sub-distributor for Colonize Media, has previously sent royalty accounting reports directly to Colonize Media. 28 1 claims and Yellowcake is only seeking information related to its own copyrights.9 2 As to the six identified categories in dispute, Yellowcake first argues that Dashgo’s 3 agreements with DSPs like iTunes, Spotify, etc., are not confidential. Such contracts are not 4 propriety and are form agreements used in the Music industry. All other distributors use the same 5 form agreements. The net revenue received by Dashgo from the DSPs from the exploitation of 6 Yellowcake’s sound recordings is directly relevant to Yellowcake’s damages. 7 Yellowcake likewise argues that Dashgo’s agreements with third-party licensors (content 8 owners, artists, etc) are not proprietary. Dashgo can easily redact the financial information 9 contained in the distribution contract as the only relevant information is as to Defendants’ 10 affirmative defense that they allegedly had the right to distribute the subject sound recordings 11 granted by third party licensors. 12 Additionally, Yellowcake contends that client lists and contacts are not trade secrets (Doc. 13 64 p.43.), citing 18 U.S.C. § 1839(3),10 because Dashgo disclosed clients on social media 14 platforms, citing Exh. 18. 15 Next, Yellowcake asserts it is not seeking “internal procedure and processes,” and “other 16 proprietary commercial information.” These categories are too broad and legally deficient, and 17 Yellowcake did not ask for such information in its discovery requests. 18 Further, Yellowcake did not ask for financial information relating to Dashgo’s clients, 19 9 The Court does not agree that the RPDs are narrow. While the Court did not analyze all of the 20 requests in the RPD, two requests are templates of most: 38. Copies of all documents evidencing any correspondence sent by Adrev on behalf of MediaMuv to any third-party. 39. Copies of all 21 documents evidencing any correspondence sent by Dashgo on behalf of MediaMuv to any third- party. (Doc. 64 p. 175.) Indeed, RPD Set Two does not define the documents requested in terms 22 of the Copyrighted Works or Foreign Works. (Doc. 64 p. 169-170.) 23 10 Section 1839(3) provides: (3) the term “trade secret” means all forms and types of financial, 24 business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, 25 procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing 26 if-- (A) the owner thereof has taken reasonable measures to keep such information secret; and 27 (B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person 28 who can obtain economic value from the disclosure or use of the information. 1 business operations performance and profitability. It only requested such information as it 2 pertains to revenue related to the sound recordings that Yellowcake owns. (Doc. 64, p. 44.) 3 Defendants have already sent the allegedly sensitive and proprietary royalty accounting reports 4 that they now seek to designate as AEO directly to Colonize, citing Exh. 17,11 royalty reports 5 concerning royalties allegedly paid to third parties from the exploitation of the sound recordings 6 claimed by Yellowcake. Contrary to Defendants’ suggestion, Colonize cannot “steal” any client 7 of Dashgo’s because such client is presumably under contract with Dashgo. 8 Similarly, Yellowcake claims it never asked for software in its discovery demands, despite 9 Dashgo arguing that documents related to its proprietary software and systems need AEO 10 designation. 11 Yellowcake maintains that it is not a competitor of Dashgo. Yellowcake owns and 12 monetizes intellectual property, including the subject copyrighted works, through third-party 13 distributors and retailers. It does not distribute or exploit music it does not own or music for any 14 third parties. In contrast, Dashgo is a digital music distributor. (Doc. 64 p.45) 15 Yellowcake reiterates that an AEO protective order will result in prejudice. Counsel will 16 be unable to share the revenue related information with Plaintiff’s representative who is more 17 knowledgeable about such information. Also, Plaintiff believes Dashgo intends to designate all 18 relevant documents as AEO, and counsel therefore will be unable to adequately prepare. It is 19 Plaintiff’s position that this case involves Yellowcake’s own copyright sound recordings and 20 Defendant’s distribution, not highly confidential competitive information, like the cases cited by 21 Defendants. (Doc. 64 p. 46.) Plaintiff asks that Defendants’ request for a two-tier/AEO protective 22 order be denied, and that Plaintiff be awarded fees for opposing the motion. 23 C. Relevant Terms of the Proposed Protective Order 24 Defendants have submitted a proposed two-tier Protective Order (Doc. 64, Appendix 1, 25 p.53-53), which is modeled after the one used the by Northern District of California in intellectual 26 property cases. The proposed protective order defines “HIGHLY CONFIDENTIAL - 27 11 Exhibit “17” consists of an email and the first few pages of an approximately 70,000-page 28 royalty report sent by Defendants Dashgo and Benjamin Patterson directly to Colonize. 1 ATTORNEYS’ EYES ONLY” information or items as “extremely sensitive ‘Confidential 2 Information or Items,’ disclosure of which to another Party or Non-Party would create a 3 substantial risk of significant financial or competitive harm that could not be avoided by less 4 restrictive means.” (Id. at ¶2.8.) 5 In turn, the proposed order defines “CONFIDENTIAL” information or items as 6 “information (regardless of how it is generated, stored or maintained) or tangible things that 7 qualify for protection under Federal Rule of Civil Procedure 26(c).” (Id. at ¶2.2.) No other 8 definition for confidential information is provided. It is unclear what portions of Rule 26(c) apply 9 to the proposed protective order because Rule 26(c) pertains to categories not at issue in this 10 litigation. The Court presumes, based on Defendants’ argument, that Rule 26(c)(1)(G) is at issue: 11 “(G) requiring that a trade secret or other confidential research, development, or commercial 12 information not be revealed or be revealed only in a specified way.” 13 The proposed protective order states that the designating party shall exercise restraint 14 when designating material as attorneys’ eyes only. (Id. at ¶5.1 (“Each Party or Non-Party that 15 designates information or items for protection under this Order must take care to limit any such 16 designation to specific material that qualifies under the appropriate standards. To the extent it is 17 practical to do so, the Designating Party must designate for protection only those parts of 18 material, documents, items, or oral or written communications that qualify – so that other portions 19 of the material, documents, items, or communications for which protection is not warranted are 20 not swept unjustifiably within the ambit of this Order.”) Mass designations are prohibited.12 (Id.) 21 III. Discussion 22 A. Legal Standards for a Motion for Protective Order 23 The Court is vested with broad discretion to manage discovery. Dichter-Mad Family 24 Partners, LLP v. U.S., 709 F.3d 749, 751 (9th Cir. 2013) (per curiam); Surfvivor Media, Inc. v. 25 Survivor Prods., 406 F.3d 625, 635 (9th Cir. 2005). District courts also have broad discretion to 26 determine whether a protective order is appropriate and, if so, what degree of protection is 27 12 The Court agrees that this “restraint” provision shall be included in the draft protective order 28 submitted to the Court after the parties’ meet and confer, as described infra. 1 warranted. Seattle Times Co. v. Rhinehart, 467 U.S. 20, 36 (1984); see also Phillips ex rel. 2 Estates of Byrd v. Gen. Motors Corp., 307 F.3d 1206, 1211–12 (9th Cir. 2002) (finding that the 3 law gives district courts broad latitude to grant protective orders to prevent disclosure of materials 4 for many types of information). Under Rule 26(c), the Court “may, for good cause, issue an order 5 to protect a party or person from annoyance, embarrassment, oppression, or undue burden or 6 expense, including one or more of the following: [ ] forbidding the disclosure or discovery; … [ ] 7 forbidding inquiry into certain matters, or limiting the scope of disclosure or discovery to certain 8 matters; …[or] requiring that a trade secret or other confidential research, development, or 9 commercial information not be revealed or be revealed only in a specified way.” Fed. R. Civ. P. 10 26(c)(1). 11 The party seeking to limit discovery has the burden of proving “good cause,” which 12 requires a showing “that specific prejudice or harm will result” if the protective order is not 13 granted. In re Roman Catholic Archbishop of Portland, 661 F.3d 417, 424 (9th Cir. 2011) (citing 14 Foltz v. State Farm Mut. Auto. Ins. Co., 331 F.3d 1122, 1130 (9th Cir. 2003)); see Fed. R. Civ. P. 15 26(c); accord Beckman Indus., Inc. v. International Ins. Co., 966 F.2d 470, 476 (9th Cir. 1992) 16 (noting that “broad allegations of harm, unsubstantiated by specific examples or articulated 17 reasoning, do not satisfy the Rule 26(c) test” (citation omitted)); see also Ctr. For Auto Safety v. 18 Chrysler Grp., LLC, 809 F.3d 1092, 1096-97 (9th Cir. 2016) (listing as examples of compelling 19 reasons when “a court record might be used to ‘gratify private spite or promote public scandal,’ to 20 circulate ‘libelous’ statements, or ‘as sources of business information that might harm a litigant's 21 competitive standing’ ” (citation omitted)). Federal Rule of Civil Procedure 26(c)(1)(G) 22 anticipates that in certain cases, discovery of trade secrets should either be limited or not 23 permitted. “Confidential business information has long been recognized as property.” Carpenter 24 v. United States, 484 U.S. 19, 26, 108 S.Ct. 316, 320, 98 L.Ed.2d 275 (1987) (“Confidential 25 information acquired or compiled by a corporation in the course and conduct of its business is a 26 species of property to which the corporation has the exclusive right and benefit, and which a court 27 of equity will protect through the injunctive process or other appropriate remedy.) 28 1 B. Analysis 2 1. Direct Competitors 3 For purposes of this motion, the record before the Court supports a finding that Plaintiff 4 and Defendants are direct competitors. Defendants have submitted competent evidence from 5 Patterson that Colonize is targeting the same client base that Dashgo is targeting for the same 6 services. (Patterson ¶¶17-19.) Patterson also states that Yellowcake is a direct competitor, based 7 on his knowledge of the industry, his review of relevant websites, and his review of the 8 allegations in the SAC. (See e.g., Patterson ¶20 (“Yellowcake and Colonize share, or shared, 9 common principals, and have other longstanding connections, currently including, without 10 limitation, an exclusive licensor-licensee relationship.”)) 11 Yellowcake and Colonize contend they are not competitors with Defendants. However, 12 they have not submitted competent evidence to support their position, which is based solely on 13 argument. Indeed, the very allegations in the SAC support the proposition that Colonize and 14 Dashgo are competitors, because Dashgo once was permitted to distribute works that Colonize 15 now exclusively is distributing. Thus, the Court finds they are competitors. W. Pac. Kraft, Inc. v. 16 Duro Bag Mfg. Co., No. CV 10-6017 DDP (SS), 2012 WL 12884045, at *3 (C.D. Cal. Aug. 27, 17 2012) (“With regard to an attorney’s-eyes-only provision, confidential information that may be 18 used against the company by a direct competitor is generally afforded more protection.”). 19 Having concluded that Plaintiff and Defendants are competitors, the Court now turns to 20 the underlying dispute concerning Defendants’ late-disclosed list of six specific categories13 of 21 requested information and whether those categories seek confidential information necessitating a 22 two-tier/AEO protective order. 23 2. Categories of Confidential Information 24 As discussed below, the Court finds that Defendants have sufficiently established that 25 13 It appears Defendants did not identify these six troublesome categories until the Joint Statement 26 was filed, despite the Court’s active involvement in the parties’ meet and confer process. If that 27 is so, the Court considers Dashgo’s lack of disclosure as a breach of the duty to meet and confer. Any such future conduct will subject the responsible party and counsel to sanctions. 28 1 limited categories of requested documents seek at least some information that is sensitive and 2 confidential and that there is potential for harmful disclosure of confidential information to a 3 competitor. The Court will therefore grant Defendants’ request for a two-tier/AEO protective 4 order. However, AEO designations shall be subject to the categories of information and the 5 limitations hereinafter described to avoid unnecessary challenges to such designations. 6 (1) Dashgo’s Agreements with Digital Service Providers 7 Yellowcake argues that contracts with DSPs like iTunes, Amazon, Spotify, etc., are not 8 confidential because they are form agreements used in the music industry by all other distributors. 9 Contrary to Yellowcake’s argument, it is not the agreement “form” that Defendants claim is 10 confidential, but the information contained in the form regarding the contractual arrangement 11 with each of Dashgo’s providers. For instance, Yellowcake’s RPD requests all documents 12 regarding the Copyrighted Works on digital distribution platform, such as YouTube, Amazon and 13 Spotify, including “contracts.” (Doc. 64 p. 119.) Unfortunately, Dashgo has failed to provide a 14 description of any type of information contained in the agreements.14 The most the Court has 15 been told is from Patterson’s declaration, which states only: “Dashgo has longstanding direct 16 relationships and integration with DSPs and performing rights organizations.” (Doc. 64, p. 76.) 17 The Court imagines that the agreements describe: the scope of the contract, the services to 18 be provided (including listing creative works which will be distributed), and the pricing agreed 19 upon by the parties. Presumably, the scope of these agreements touches more than merely the 20 copyrighted works allegedly infringed by Yellowcake and includes terms on which Dashgo has 21 agreed with these DSPs for unrelated digital works distributed to the DSPs. As a competitor, 22 disclosure of the contractual terms Dashgo has with the same DSPs that, at least, Colonize 23 contracts with for similar services, will put Dashgo at a competitive disadvantage. 24 It is probable that information can be redacted from these agreements to protect 25 confidential information. But given that the Court cannot make a determination based on the lack 26 of information, the Court will conduct an in camera review of three contracts with DSPs. The 27 14 For instance, Dashgo does not argue that the agreements contain a confidentiality provision or 28 if the specific agreements identify any information as “confidential.” 1 Court notes that Dashgo has failed to carry its burden as to this category of documents, but 2 nonetheless, based on the Court’s concern with the disclosure of competitive information, the 3 Court will employ the in camera proceeding. Thus, Dashgo will provide three representative 4 contracts with DSPs of Dashgo’s choosing to the Court with fourteen (14) days of service of this 5 order, in a sealed envelope to the clerk’s office, noted on the envelope: case name and number, 6 “IN CAMERA for Hon. Barbara A. McAuliffe. NOT TO BE FILED.” 7 (2) Dashgo’s agreements with third party licensors (content owners, artists and record 8 labels) 9 Patterson states that RPD, Set One, captures highly sensitive documents and information 10 of clients of Defendants. (Doc. 64 ¶29, p. 84.) According to Patterson, Defendants’ clients “have 11 privacy, confidentiality and other rights that would prevent the disclosure of their highly 12 sensitive, proprietary and confidential documents and information to Plaintiff.” (Id. at ¶30.) He 13 further states that to disclose such information “would be potentially putting its business 14 relationships at risk.” (Id.) 15 Dashgo has failed to provide any kind of specific information as to what is “private, 16 confidential and sensitive” such that this information should be subject to an AEO designation. 17 Patterson’s conclusory statements that information is confidential are insufficient. The Court 18 cannot discern what information such contracts contain. Information can be subject to a 19 “confidential” designation in a protective order but not “AEO.” The Court acknowledges that the 20 financial arrangement the third party has with Defendants would be confidential and sensitive, if 21 disclosed to a competitor. As Plaintiff suggests, and the Court adopts, licensor identification and 22 financial terms in third party contracts can be redacted and subject to a standard privilege log. 23 Finjan, Inc. v. SonicWall, Inc., 2020 WL 4192285, at *3 (N.D. Cal. July 21, 2020) (“[E]ven if 24 portions of the exhibits or testimony are not relevant, a party generally may not redact or withhold 25 from production irrelevant portions of documents that also contain relevant and responsive 26 information.”)). These redactions should be sufficient to protect privacy and confidential 27 information. For any redactions, Defendants shall produce a privilege log, formally asserting that 28 the redacted sections of their document production are protected by specifically identified 1 privileges. 2 (3) Documents containing Dashgo’s existing client list and contacts 3 Yellowcake argues a list of clients and their contact information, without more, is not a 4 trade secret because it is generally and publicly available information and thus is not confidential, 5 citing 18 U.S.C. § 1839(3). 6 “It is well-established that a customer list may constitute a protectable trade secret.” 7 BakeMark, LLC v. Navarro, 2021 WL 2497934, at *8 (C.D. Cal. Apr. 24, 2021) (citing Morlife, 8 Inc. v. Perry, 56 Cal.App.4th 1514 (1997)). Numerous cases in this Circuit have relied on 9 Morlife in holding that customer lists can be trade secrets. See e.g., BakeMark, LLC v. Navarro, 10 2021 WL 2497934, at *8; Arthur J. Gallagher & Co. v. Petree, No. 2:18-CV-03274 JAM KJN, 11 2022 WL 1241232, at *7 (E.D. Cal. Apr. 27, 2022); Coldwell Solar, Inc. v. ACIP Energy LLC, 12 No. 2:20-CV-00768 TLN CKD, 2021 WL 3857981, at *10 (E.D. Cal. Aug. 30, 2021). 13 In Morlife, the court of appeals affirmed the trial court's finding that “a compilation, 14 developed over a period of years, of names, addresses, and contact persons, containing pricing 15 information and knowledge about particular roofs and roofing needs of customers using its 16 services” constituted a trade secret. Morlife, 56 Cal.App.4th at 1521. The court reasoned the client 17 list “had independent economic value” as “the identity of those particular commercial buildings 18 using such services is not generally known.” Id. By contrast, client lists are not protected trade 19 secrets where “the names and addresses of persons, firms and corporations using the type of 20 products sold by plaintiff are commonly known to the trade.” Morlife, 56 Cal.App.4th at 1521- 21 1522; Chartwell Staffing Services Inc. v. Atlantic Solutions Group Inc., Case No. 19-cv-00642- 22 JLS-JDE, 2019 WL 2177262, at *7 (C.D. Cal. May 20, 2019) (“The detailed compilation of all 23 [Plaintiff]’s customers, combined with specific information concerning each customer's ‘billing 24 rates, key contacts, specialized requirements and mark up rates’ are protectable trade secrets.”) 25 (citation omitted) (emphasis in original); Argo Group U.S., Inc. v. Prof'l Governmental 26 Underwriters, Inc., No. 13-1787-AG (DFMx), 2013 WL 11327772 at 3 (C.D. Cal. Dec. 6, 2013) 27 (noting that “customer lists can be protected trade secrets, but courts are reluctant to protect them 28 ‘to the extent they embody information which is readily available through public sources’ ”) 1 Yellowcake argues that the clients can be determined from Dashgo’s website. While 2 some or all may be identified, it is substantively different to force an entity to compile and 3 condense its entire book of business and produce it to a competitor. Thus, the Court is persuaded 4 that disclosure of client lists and contact information would be disclosing confidential 5 information. Any such disclosure shall be made pursuant to an AEO provision of a protective 6 order. 7 (4) documents reflecting Dashgo’s internal procedures and processes and other 8 proprietary commercial information 9 Yellowcake contends it is not seeking “internal procedure and processes,” and “other 10 proprietary commercial information,” and did not ask for such information in its discovery 11 requests.15 12 However, the discovery requests are broad requests for documents which arguably include 13 the documents of concern to Dashgo. The Court need not rule on the scope of discovery requests 14 in this motion. Since Yellowcake argues it is not seeking “internal procedure and processes,” and 15 “other proprietary commercial information,” and Yellowcake does not object to production of 16 such documents, if any, under AEO designation, any such documents may be produced pursuant 17 to an AEO designation. Thus, to the extent Defendants produce such information, it shall be 18 subject to an AEO designation in the protective order. 19 (5) documents containing financial information, including such information relating to 20 Dashgo’s clients, business operations, performance and profitability 21 Yellowcake agrees to limit its demand for financial documents to three years preceding 22 the filing of the complaint. 23 Nonetheless, the Court cannot determine what documents fall within this category. The 24 15 The Court disagrees that the RPD does not ask for such information; it can be so interpreted to 25 request internal information. For instance, a select number of requests provide as follows: 20. Copies of all of Dashgo's internal documents concerning or referring to Jose Teran. 21. Copies of 26 all of Dashgo's internal documents concerning or referring to Webster Batista Fernandez. 22. 27 Copies of all of Adrev’s internal documents concerning or referring to Jose Teran. 23. Copies of all of Adrev’s internal documents concerning or referring to Webster Batista Fernandez. (Doc. 64 28 p. 173.) 1 party seeking to limit discovery has the burden of proving “good cause,” which requires a 2 showing “that specific prejudice or harm will result” if the protective order is not granted. In re 3 Roman Catholic Archbishop of Portland in Or., 661 F.3d 417, 424 (9th Cir.2011). Yet, the Court 4 acknowledges that competitors do not usually hand out their sales statistics to one another but 5 regard them as confidential and sensitive information which they often go to great pains to hide. 6 Yellowcake represents that at a minimum, royalty reports would fall within this category 7 but should be produced without an AEO designation. Yellowcake points out that Dashgo has 8 already provided royalty reports directly to Colonize and an example is attached as Exhibit “17.” 9 (Doc. 64 p.41 n.10.) 10 Part of the uncertainty regarding this discovery category falls at the feet of Yellowcake. 11 The FAC and the SAC claim infringement of different copyrighted materials. (See n.2, infra.) 12 Dashgo represents that since the filing of the Joint Statement for this motion, Yellowcake has 13 provided a “list” of identifiable copyrighted works that Dashgo can use to provide documents and 14 information. 15 The Court finds that financial information directly related to the royalty or revenue of the 16 alleged Copyrighted Works and Foreign Works (as further provided in the “list” of identifiable 17 copyrighted works) is not subject to AEO designation. Such documents are relevant to and 18 probative of the alleged infringement. The Court intends that any financial information produced 19 regarding revenue related to the sound recordings that Yellowcake alleges it owns (as identified 20 in the “list”) is not subject to AEO designation. Any other financial information, if contained on 21 a produced document, may be redacted and subject to a privilege log. 22 To the extent that Defendants contend they are being asked to produce documents related 23 to “business operations, performance and profitability,” such information can be designated as 24 AEO, except as it directly relates to the “list” of identifiable copyrighted works. These excepted 25 documents will be produced without an AEO designation and Defendants shall produce a 26 privilege log for any redactions, formally asserting that the redacted sections are protected by 27 specifically identified privileges. 28 1 (6) Proprietary Software and Systems Developed 2 Yellowcake contends it has not requested any proprietary information, such as propriety 3 software and systems. 4 To the extent that Dashgo produces such information, it may be produced under an AEO 5 designation. 6 C. Attorney’s fees 7 Both sides request an award of attorneys’ fees. Both sides are denied attorneys’ fees. 8 Having reviewed the Joint Statement, the Court finds both sides’ positions have partial 9 merit. As the Court has so informed the parties in multiple status conferences, the Court will not 10 countenance gamesmanship and noncooperation in discovery from any party. As the parties are 11 aware, the Federal Rules of Civil Procedure, including the discovery rules, must be construed, 12 administered and employed not only by the Court, but also by the parties “to secure the just, 13 speedy, and inexpensive determination of every action and proceeding.” Fed. R. Civ. P. 1. The Court expects and demands that the parties and counsel act with professionalism and cooperation 14 in all aspects of this case, and as relevant to this motion, conduct discovery in a cooperative 15 manner. 16 IV. Conclusion and Order 17 The Court finds that a two tier/AEO provision in a protective order is warranted in this 18 case, for the documents as noted in this Order. The Designating Party must designate for 19 protection only those parts of material, documents, items, or oral or written communications that 20 qualify – so that other portions of the material, documents, items, or communications for which 21 protection is not warranted are not swept unjustifiably within the ambit of this Order. 22 Therefore, the Motion for Entry of a Two-Tier Protective Order is GRANTED for the 23 documents and information noted in this Order. 24 IT IS FURTHER ORDERED as follows: 25 1. The parties shall meet and confer on proposed language and shall submit a revised 26 protective order for the Court's review within thirty (30) days of service of this order; 27 2. Dashgo will provide three representative contracts with DSPs of Dashgo’s choosing to 28 1 the Court with fourteen (14) days of service of this order, in a sealed envelope to the 2 clerk’s office, noted on the envelope: case name and number, “IN CAMERA for Hon. 3 Barbara A. McAuliffe. NOT TO BE FILED;” 4 3. The parties are directed to meet and confer to identify the “list” of Copyrighted Works 5 and Foreign Works and which definitions will be used for responding to the RPD and 6 Interrogatories. To the extent such a “list” has not been provided by Plaintiff to 7 Defendants, the parties are directed to meet and confer and Plaintiffs are directed to 8 provide such a list, with specificity. Defendants are entitled to know the works, with 9 specificity, they are alleged to have infringed. 10 4. Once the parties have met and conferred on the “list” of Copyrighted Works and 11 Foreign Works at issue in this case, and following entry of the protective order, 12 Defendants are required to supplement their responses to the RPD and Interrogatories 13 Set One eliminating the boilerplate objections to the discovery requests. 14 IT IS SO ORDERED. 15 16 Dated: July 20, 2022 /s/ Barbara A. McAuliffe _ 17 UNITED STATES MAGISTRATE JUDGE 18 19 20 21 22 23 24 25 26 27 28