Static Media LLC v. Leader Accessories LLC ( 2022 )

Case: 21-2303 Document: 39 Page: 1 Filed: 06/28/2022
United States Court of Appeals
for the Federal Circuit
______________________
STATIC MEDIA LLC,
Plaintiff-Appellee
v.
LEADER ACCESSORIES LLC,
Defendant-Appellant
JEN-FENG LEE,
Appellant
______________________
2021-2303
______________________
Appeal from the United States District Court for the
Western District of Wisconsin in No. 3:18-cv-00330-wmc,
Judge William M. Conley.
______________________
Decided: June 28, 2022
______________________
DEBORAH CAROL MEINERS, DeWitt Ross & Stevens
S.C., Madison, WI, argued for plaintiff-appellee. Also rep-
resented by ELIJAH B. VAN CAMP, HARRY E. VAN CAMP.
AARON WAYNE DAVIS, Valhalla Legal, PLLC, Custer,
SD, argued for appellants.
______________________
Before DYK, REYNA, and TARANTO, Circuit Judges.
Case: 21-2303 Document: 39 Page: 2 Filed: 06/28/2022
2 STATIC MEDIA LLC v. LEADER ACCESSORIES LLC
Opinion for the court filed by Circuit Judge DYK.
Dissenting opinion filed by Circuit Judge REYNA.
DYK, Circuit Judge.
Leader Accessories LLC appeals a decision of the Dis-
trict Court for the Western District of Wisconsin. The dis-
trict court held Leader and its attorney, Jen-Feng Lee, in
contempt for allegedly violating a protective order by dis-
closing confidential documents and awarded Static Media
LLC sanctions and attorney’s fees. We hold that the dis-
closure was not a clear violation of the protective order and
accordingly reverse the district court’s contempt finding
and its award of sanctions and attorney’s fees.
BACKGROUND
Static Media LLC (“Static”) sued Leader Accessories
LLC (“Leader”) in May 2018 (“the Wisconsin action”) for
infringing its D771,400 design patent (“D400 patent”). The
merits of the case were resolved when the district court
granted Leader’s motion for summary judgement of non-
infringement, and this appeal presents no issue related to
that decision. Rather, this appeal concerns an alleged vio-
lation of a protective order issued by the district court.
In September 2018, the parties entered into the protec-
tive order, approved by the court, under which they could
designate certain documents and information produced
during discovery as “Confidential” or “Highly Confiden-
tial.” The protective order’s purpose was to mitigate the
risk of “injury or damage” and “competitive disad-
vantage[s]” posed by “public dissemination and disclosure
of” the confidential information. J.A. 42. To that end, con-
fidential documents were subject to the following re-
strictions:
3. All Confidential information and documents,
along with the information contained in the docu-
ments, shall be used solely for the purpose of this
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STATIC MEDIA LLC v. LEADER ACCESSORIES LLC 3
action and no person receiving such information or
documents shall, directly or indirectly, transfer,
disclose or communicate in any way the infor-
mation or the contents of the documents to any per-
son other than those specified in paragraph 4.
J.A. 43 (emphasis added). Paragraph 4 allowed the parties
to disclose confidential-designated documents to a limited
group of people, including:
4. Access to any Confidential information or docu-
ment shall be limited to:
...
f. outside independent persons (i.e., persons not cur-
rently or formerly employed by, consulting with or
otherwise associated with any party) who are re-
tained by a party or its attorneys to furnish consult-
ing, technical or expert services and/or to give
testimony in this action and have executed the
“Written Assurance” as specified below.
J.A. 44 (emphasis added). Thus, outside independent per-
sons retained to furnish consulting, technical, or expert
services in the Wisconsin action were also independently
bound by the terms of the protective order because they
were obligated to sign a separate “Written Assurance” be-
fore receiving any confidential information:
7. Before any person designated in 4(f) is given ac-
cess to Confidential or Highly Confidential – Trial
Counsels’ Eyes Only information, the individual
shall first read this Order and, as is appropriate
under the circumstances, either execute a “Written
Assurance” in the form attached hereto as Exhibit
A, acknowledge on the record that he or she has
read and agrees to be bound by the terms of the Or-
der and the jurisdiction of this Court for the sole
purpose of enforcing same, or otherwise agree in
writing to be bound by the terms of this Order and
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4 STATIC MEDIA LLC v. LEADER ACCESSORIES LLC
to submit to the jurisdiction of this Court for the
sole purpose of enforcing this Order.
J.A. 45 (emphasis added). The Written Assurance re-
stricted independent consultants’ use of confidential infor-
mation:
I shall not divulge any information or documents or
copies of documents designated Confidential or
Highly Confidential – Trial Counsels’ Eyes Only
obtained pursuant to such Protective Order or the
contents of such documents to any person other
than those specifically authorized by the Protective
Order. I shall not copy or use such information or
documents except for the purposes of this action and
pursuant to the terms of the Protective Order.
J.A. 50–51 (emphasis added).
Shortly after Static and Leader agreed to this protec-
tive order in the Wisconsin action, Static sent a cease-and-
desist letter to another party, OJ Commerce, also alleging
infringement of the D400 patent. Upon receipt of the let-
ter, OJ Commerce’s attorney, Sam Hecht, contacted
Leader’s attorney, Mr. Lee, and the parties decided to enter
into a Joint Defense Group (“JDG”) to be governed by a
Joint Defense Agreement (“JDA”). Such an agreement is a
useful tool to protect the confidentiality of communications
between parties “where a joint defense effort or strategy
has been decided upon and undertaken by the parties and
their respective counsel.” United States v. Evans, 113 F.3d
1457, 1467 (7th Cir. 1997) (quoting United States v.
Schwimmer, 892 F.3d 237, 243 (2d Cir. 1989)). Both attor-
neys testified that they understood the JDG to be “for the
purpose of common defense . . . to promote the joint inter-
est.” J.A. 96; J.A. 103.
Thereafter, Static sued OJ Commerce for patent in-
fringement in United States District Court for the South-
ern District of Florida on January 30, 2019, (“the Florida
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STATIC MEDIA LLC v. LEADER ACCESSORIES LLC 5
action”) and the parties executed the JDA. Mr. Lee then
sent Mr. Hecht copies of the protective order and Written
Assurance form from the Wisconsin action. Four days after
signing the JDA, Mr. Hecht signed and returned the Writ-
ten Assurance to Mr. Lee. Shortly thereafter, Mr. Lee
emailed Mr. Hecht two deposition transcripts and related
exhibits from the Wisconsin action, including Static’s li-
censing and royalty agreements and sales and revenue in-
formation. Only a few of the pages in those documents
were marked confidential pursuant to the protective order.
The rest were not.
In both of Mr. Lee’s email disclosures to Mr. Hecht, he
asked him to “note the protective order re Confidential
AEO designation” and reminded him to “please adhere to
the protective order.” J.A. 132. Mr. Lee later testified that
he sent the documents to Mr. Hecht for the purpose of
“more effective joint defense consultation and discussion,”
including “discussion and consultation” regarding Leader’s
April 2019 motion for summary judgment in the Wisconsin
action. J.A. 98. Mr. Lee described “the consultation with
[Mr.] Hecht” as “more comprehensive” than Mr. Lee’s con-
sultation with other experts, “encompassing infringement,
invalidity, damages, and additional and assertable poten-
tial defenses.” J.A. 99.
Several months later, in September 2019 settlement
negotiations between Static and OJ Commerce in the Flor-
ida action, Mr. Hecht improperly used the royalty agree-
ments he obtained from Mr. Lee to assess a settlement
proposal from Static. Mr. Hecht revealed to Static’s coun-
sel, attorney Susan Warner, who was not counsel in the
Wisconsin action nor a claimed signatory to the protective
order, that OJ Commerce “ha[d] a JDA with counsel [for
Leader]” which is why he was “fully aware about the actual
royalties [Static had] received.” J.A. 104. In describing
this incident, Mr. Lee testified that he had “no reason to
expect that [Mr. Hecht] would use the information in
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6 STATIC MEDIA LLC v. LEADER ACCESSORIES LLC
violation of the [protective order], given that [he] had [Mr.
Hecht] sign the Acknowledgement and gave [Mr. Hecht] re-
peated reminders about the [protective order].” J.A. 130.
As a result of Mr. Hecht’s actions, Static moved for dis-
covery sanctions and an order holding Leader and its coun-
sel in civil contempt, alleging that Mr. Lee violated the
protective order by disclosing the confidential documents
to Mr. Hecht. A magistrate judge found Leader and Mr.
Lee in civil contempt for violating the protective order. The
district court affirmed.
Following the district court’s affirmance, the magis-
trate judge ordered Leader to pay Static’s attorney’s fees
and to pay Static a $1,000 sanction. The district court
again affirmed. Leader and its counsel appeal. We have
jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).
DISCUSSION
We review the district court’s “decision to sanction and
the choice of an appropriate sanction” under an abuse of
discretion standard. Melendez v. Ill. Bell Tel. Co., 79 F.3d
661, 670 (7th Cir. 1996).
Federal Rule of Civil Procedure 37 permits district
courts to “treat[] as contempt of court the failure to obey
any [court] order.” Fed. R. Civ. P. 37(b)(2)(A)(vii). A con-
tempt finding requires the moving party to “establish by
clear and convincing evidence that (1) a court order sets
forth an unambiguous command; (2) the alleged contemnor
violated that command; (3) the violation was significant,
meaning the alleged contemnor did not substantially com-
ply with the order; and (4) the alleged contemnor failed to
make a reasonable and diligent effort to comply.” SEC v.
Hyatt, 621 F.3d 687, 692 (7th Cir. 2010) (citing Prima Tek
II, LLC v. Klerk’s Plastic Indus., B.V., 525 F.3d 533, 542
(7th Cir. 2008)). As we discuss below, the Supreme Court
has recently clarified that a district court’s finding of
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STATIC MEDIA LLC v. LEADER ACCESSORIES LLC 7
contempt is improper when there “is [a] fair ground of
doubt as to the wrongfulness of the [contemnor’s] conduct.”
Taggart v. Lorenzen, 139 S. Ct. 1795, 1801–02 (2019) (quot-
ing Cal. Artificial Stone Paving Co. v. Molitor, 113 U.S.
609, 618 (1885)).
I
Both the district court and magistrate judge’s decisions
here appear to rest on two separate theories. We first ad-
dress the district court’s theory that Leader and Mr. Lee
should be held in contempt because Mr. Lee was responsi-
ble for Mr. Hecht’s improper use of the confidential infor-
mation in the Florida action. The magistrate judge based
its contempt finding on the fact that Mr. Lee knew or
should have known that Mr. Hecht would use the confiden-
tial information for improper purposes. Its initial con-
tempt order stated, without citing evidentiary support,
that Mr. Hecht “made [his] intention[]” to “use[] the confi-
dential information he received from Leader to bolster OJ
Commerce’s defense in the Florida litigation” “clear to
Leader’s counsel before entering the JDA.” J.A. 16. It was
on this basis that the magistrate judge concluded it was
“illogical, unreasonable and self-serving for Leader to con-
tend that it [could] unilaterally disclose Static Media’s con-
fidential information from this case to a third party,” and
that in doing so, Leader “was at fault and . . . acted will-
fully and in bad faith.” J.A. 16–17. When the district court
affirmed the contempt finding, it did so in part because
Leader and its counsel “had to know that OJ Commerce’s
and its counsel’s principal use of the information would be
in defending against the [Florida action].” J.A. 21.
Leader argues that the district court abused its discre-
tion because Static did not prove by clear and convincing
evidence that Mr. Lee’s disclosure to Mr. Hecht violated the
protective order. It relies on the fact that Mr. Lee did not
disclose any confidential documents to Mr. Hecht until
Case: 21-2303 Document: 39 Page: 8 Filed: 06/28/2022
8 STATIC MEDIA LLC v. LEADER ACCESSORIES LLC
after Mr. Hecht had signed the Written Assurance, under
which he promised not to “use [the confidential] infor-
mation or documents except for purposes of [the Wisconsin]
action.” Appellant’s Br. 18–19 (citing J.A. 98; 106–07).
Leader also notes that Mr. Lee reminded Mr. Hecht of the
protective order’s obligations each time he disclosed confi-
dential information to Mr. Hecht. Finally, Leader argues
that there was “no evidence” to support the district court’s
conclusion that Mr. Lee “knew that Mr. Hecht was going to
use [the] confidential information in [the Florida action],”
given Mr. Lee’s testimony that he had “no reason to expect
that OJ Commerce’s counsel would use the information in
violation of the [protective order].” Id. at 19 (citing
J.A. 130).
We agree that Static failed to prove by clear and con-
vincing evidence that Leader violated the protective order
in this respect. There is no clear and convincing eviden-
tiary support for the magistrate judge’s and the district
court’s respective conclusions that Mr. Lee knew or should
have known Mr. Hecht would use the confidential infor-
mation in the Florida action. Before disclosing the deposi-
tion transcripts to Mr. Hecht, Mr. Lee did exactly what was
required to ensure that Mr. Hecht would abide by the pro-
tective order. Mr. Lee had Mr. Hecht sign the Written As-
surance, and with each disclosure, Mr. Lee reminded Mr.
Hecht of the obligations the protective order imposed on his
use of the confidential information. There is similarly no
sufficient basis for finding that Mr. Lee should have known
that Mr. Hecht would independently decide to violate the
protective order. In these circumstances, all that remains
regarding the first theory of contempt is the fact that Mr.
Hecht made an improper disclosure in the Florida action,
but Static conceded at oral argument that it would be erro-
neous for the district court to hold Leader and Mr. Lee in
contempt for Mr. Hecht’s disclosure. The district court’s
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STATIC MEDIA LLC v. LEADER ACCESSORIES LLC 9
first basis for finding contempt therefore was an abuse of
discretion.
II
The second basis relied on by the district court, and de-
fended on appeal by Static, was that Mr. Lee’s disclosure to
develop a joint defense strategy itself constituted an imper-
missible use of the confidential information not “solely” for
the purpose of the Wisconsin action. The magistrate judge
noted that Leader “provide[d] scant detail about the nature
of the JDG or the exact nature of Hecht’s services,” and
concluded that the JDA, “a private contract between
Leader and OJ Commerce,” could not “supersede, modify,
or amend the protective order entered in this case.”
J.A. 16. The district court agreed, dismissing “whatever
arguable role [Mr. Hecht] may have played in assisting
[Leader] as a so-called 4(f) ‘consultant,’” before concluding
that Mr. Lee’s disclosure violated the protective order’s use
restrictions. J.A. 21.
Leader claims that Mr. Lee’s disclosure was permitted
by paragraph 4(f) of the protective order because Mr. Hecht
was a contractual consulting attorney hired to “discuss[]
various aspects of the defenses, including issues of retain-
ing/sharing experts, damages evaluation, invalidity and
non-infringement arguments in Leader’s motion for sum-
mary judgment filing, overall joint defense strategies, etc.”
Appellant’s Br. 8. But Static contends that the disclosure
of the information to Mr. Hecht was not “solely for the pur-
pose of [the Wisconsin action]” because it was to be used for
developing a joint defense strategy for both actions.
J.A. 43. Static characterizes Mr. Lee’s testimony that he
shared “the deposition transcripts . . . for more effective
joint defense consultation and discussion,” including “vari-
ous aspects of the defenses, including . . . overall joint de-
fense strategies, etc.,” as an “admi[ssion] that [he] disclosed
the confidential information for a purpose other than the
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10 STATIC MEDIA LLC v. LEADER ACCESSORIES LLC
defense of the [Wisconsin] action alone.” Appellee’s Br. 10–
11 (quoting J.A. 98). Thus, according to Static, Mr. Lee’s
use of the information for joint defense purposes was im-
permissible.
Because contempt is a “severe remedy,” the Supreme
Court has recently instructed that courts should not “re-
sort[] to [it] where there is [a] fair ground of doubt as to the
wrongfulness of the [contemnor’s] conduct.” Taggart, 139
S. Ct. at 1801–02 (quoting Cal. Artificial Stone, 113 U.S. at
618). “Under the fair ground of doubt standard, civil con-
tempt . . . may be appropriate when the [contemnor] vio-
lates a [protective] order based on an objectively
unreasonable understanding of the . . . order or the stat-
utes that govern its scope.” Id. at 1802. The question, then,
is whether it was objectively unreasonable to conclude that
Mr. Lee’s use of the information for joint defense purposes
was permitted by the protective order.
The alleged violation of the protective order turns on
the meaning of the term “use” and whether it extends to a
disclosure to parties bound by the protective order. When
the Supreme Court was similarly tasked with interpreting
“use” in a criminal statute, it instructed that the term “use”
“c[ould not] be interpreted apart from context,” and should
instead be “analyzed in light of the terms that surround it.”
Smith v. United States, 508 U.S. 223, 229 (1993); see also
Phillips v. AWH Corp., 415 F.3d 1303, 1314 (Fed. Cir. 2005)
(en banc) (“[T]he context in which a term is used in the as-
serted claim can be highly instructive.”). Other circuits
have followed this instruction when interpreting “use” in
protective orders. The Ninth Circuit held that a protective
order must be interpreted “to comply with common sense”
and in a manner that “connect[s] its prohibitions to its pur-
pose.” In re Dual-Deck Video Cassette Recorder Antitrust
Litig., 10 F.3d 693, 695 (9th Cir. 1993).
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STATIC MEDIA LLC v. LEADER ACCESSORIES LLC 11
We conclude that it was improper to hold Leader and
Mr. Lee in contempt because, when read in context, there
is a fair ground of doubt as to whether the protective order
barred Mr. Lee’s disclosure to develop a joint defense strat-
egy. Looking to the order’s stated purpose, its goal is pre-
venting the public dissemination and disclosure of
sensitive information:
The parties and non-parties to this litigation may
assert that public dissemination and disclosure of
Confidential or Highly Confidential – Trial Coun-
sels’ Eyes Only information could cause injury or
damage to the party or non-party disclosing or pro-
ducing the information, and could place that party
or non-party at a competitive disadvantage[.]
J.A. 42.
That the protective order exists to prevent injury, dam-
age, or competitive disadvantages resulting from public
disclosure of the information suggests that a “use” entirely
internal to protective order signatories—developing a joint
defense strategy—would not violate its terms, even though
the information would be used to develop a strategy bene-
ficial to both the Wisconsin action and the Florida action.
In other words, “use” here implies disclosure to the public
or those not signatories to the protective order. The rea-
sonableness of this interpretation is supported by decisions
holding that the use of information gained by an attorney
under a protective order in one case may appropriately be
used by the same attorney to develop a strategy applicable
to a second action.
In Dual-Deck, the Ninth Circuit vacated a district court
decision holding the plaintiff in contempt for violating a
protective order, the terms of which required that confiden-
tial information obtained in the parties’ 1987 action be
“used solely in the preparation for trial and/or trial of this
action” and “shall not be used at any time for any other
Case: 21-2303 Document: 39 Page: 12 Filed: 06/28/2022
12 STATIC MEDIA LLC v. LEADER ACCESSORIES LLC
purpose whatsoever.” 10 F.3d at 694. The district court
held that the plaintiff violated the order by using infor-
mation obtained in discovery in the 1987 action to com-
mence another action against the same defendant in 1990;
referencing that information under seal in support of a mo-
tion in that action; and requesting discovery in that action
based on the confidential information. Id. In vacating the
district court’s decision, the Ninth Circuit explained that
the protective order was designed “to protect commercial
secrets” and noted that the plaintiff “went to great lengths
to avoid revealing in the public filings anything it had
learned in discovery.” Id. at 695–96. It held that interpret-
ing “use” divorced from the order’s goal of protecting com-
mercial secrets “would be absurd,” explaining:
Because [plaintiff’s] lawyers cannot achieve total
amnesia and all their subsequent work in antitrust
litigation against the defendants (and perhaps an-
yone else) would be informed by what they learned
during discovery in the 1987 suit, the order would
prohibit them from representing [plaintiffs] at all
in the 1990 litigation. Indeed, lawyers who learn
from and use their experience obtained in discovery
under such an order would have to change fields,
and never do antitrust work again, lest they “use”
what they learned in a prior case “in any way what-
soever” in any “other action.” For the protective or-
der to comply with common sense, a reasonable
reading must connect its prohibitions to its pur-
pose—protection against disclosure of commercial
secrets.
Id. at 695; see also Royal Park Invs. SA/NV v. Deutsche
Bank Nat’l Tr. Co., 192 F. Supp. 3d 400, 406 (S.D.N.Y.
2016) (finding prohibition on use of discovery materials in
other cases particularly “problematic” when “two lawsuits
have been filed by the same plaintiff, in the same court, on
the same legal theories, against two defendants who
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STATIC MEDIA LLC v. LEADER ACCESSORIES LLC 13
already share the same counsel”); Streck, Inc. v. Rsch. &
Diagnostic Sys., Inc., 250 F.R.D. 426, 435 (D. Neb. 2008)
(finding no violation of similar order because a “general ref-
erence to protected documents [in subsequent] proceedings
[was] insufficient” when “counsel did not disclose any con-
fidential information”); Hu-Friedy Mfg. Co. v. Gen. Elec.
Co., No. 99 C 0762, 1999 WL 528545, at *3 (N.D. Ill. July
19, 1999) (declining to interpret order “barring future use
of confidential information that is independently relevant
and discoverable in a subsequent action into a restriction
on an attorney’s right to practice law”). 1 Indeed, at oral
argument, Static acknowledged that it would be permissi-
ble under the protective order for an attorney who gains
knowledge in one case to use that information to develop a
strategy applicable to another case.
Under Taggart, contempt is improper when there is a
fair ground of doubt as to whether a party’s actions violate
a protective order, 2 and applying that standard here, it is
1 Other district court cases finding violations of pro-
tective orders typically involve public disclosures of infor-
mation or disclosures to parties who are not signatories to
the protective orders. See, e.g., EEOC v. Dial Corp., No. 99
C 3356, 2001 WL 1945089, at *4 (N.D. Ill. Dec. 6, 2001)
(finding contempt for revealing confidential information to
the press); Grove Fresh Distribs., Inc v. John Labatt Ltd.,
888 F. Supp. 1427, 1445–47 (N.D. Ill. 1995) (finding con-
tempt for same and for disclosing confidential materials in
publicly filed brief in separate action).
2 To the extent that our earlier decision in TiVo Inc.
v. EchoStar Corp., 646 F.3d 869, 887–88 (Fed. Cir. 2011)
(en banc), might be read as rejecting the fair ground of
doubt standard, the Supreme Court’s decision in Taggart
clearly holds that civil contempt is improper when there is
a “fair ground of doubt as to” whether a party’s actions vi-
olated a court order, 139 S. Ct. at 1801–02.
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14 STATIC MEDIA LLC v. LEADER ACCESSORIES LLC
unreasonable to view the protective order as clearly prohib-
iting the disclosure of confidential documents to develop a
joint defense strategy when the recipient is also a signatory
to the protective order. The district court’s conclusion oth-
erwise was an abuse of discretion. It was objectively rea-
sonable to interpret the protective order as prohibiting only
the public disclosure of documents or disclosure to a third
party not bound by the protective order. That is not what
Mr. Lee did here.
Because we hold that there was a “lack of evidence sup-
porting the [district court’s] finding of contempt,” the
award of sanctions and attorney’s fees similarly “cannot
stand.” Autotech Techs. LP v. Integral Rsch. & Dev. Corp.,
499 F.3d 737, 752 (7th Cir. 2007).
CONCLUSION
For the foregoing reasons, we reverse the district
court’s contempt order and its corresponding award of
sanctions and attorney’s fees.
REVERSED
COSTS
Costs to appellant.
Case: 21-2303 Document: 39 Page: 15 Filed: 06/28/2022
United States Court of Appeals
for the Federal Circuit
______________________
STATIC MEDIA LLC,
Plaintiff-Appellee
v.
LEADER ACCESSORIES LLC,
Defendant-Appellant
JEN-FENG LEE,
Appellant
______________________
2021-2303
______________________
Appeal from the United States District Court for the
Western District of Wisconsin in No. 3:18-cv-00330-wmc,
Judge William M. Conley.
______________________
REYNA, Circuit Judge, dissenting.
I respectfully dissent.
We review the district court’s decision regarding sanc-
tions for violation of a discovery order under the law of the
regional circuit, here, the Seventh Circuit. See Graves v.
Kemsco Grp., Inc., 852 F.2d 1292, 1292 (Fed. Cir. 1988).
The Seventh Circuit is clear that the district court is enti-
tled to deference in matters concerning sanctions because
the district court is in the best position to determine if a
party has complied with its own discovery orders.
Case: 21-2303 Document: 39 Page: 16 Filed: 06/28/2022
2 STATIC MEDIA LLC v. LEADER ACCESSORIES LLC
Melendez v. Ill. Bell Tel. Co., 79 F.3d 661, 670 (7th Cir.
1996); see also Smith v. Chi. Sch. Reform Bd. of Trs., 165
F.3d 1142, 1144 (7th Cir. 1999) (in reviewing the imposi-
tion of sanctions in a suit relating to racial discrimination,
the Seventh Circuit stated expressly that “Appellate re-
view of sanctions is deferential”). Accordingly, we cannot,
under Seventh Circuit law, reverse the imposition of sanc-
tions for a violation of a discovery order unless it is clear
that no reasonable person could concur in the trial court’s
assessment. Melendez, 79 F.3d at 670; see also Scott v.
Chuhak & Tecson, 725 F.3d 772, 778 (7th Cir. 2013) (“[W]e
uphold any exercise of the district court’s discretion that
could be considered reasonable, even if we might have re-
solved the question differently.”). But, here, the majority
denies deference to resolve the question differently.
Appellee asserted claims of patent infringement
against multiple defendants in separate suits in distinct
districts. The defendants in those cases, Appellant and a
nonparty to this appeal, entered into a joint defense agree-
ment under which Appellant disclosed Appellee’s confiden-
tial financial information. That confidential information
was used outside this litigation, and more specifically, by
the nonparty in the second litigation. The district court
determined that Appellant knew or should have known
that the disclosure would be used in violation of the protec-
tive order. As such, the court exercised its discretion to is-
sue monetary sanctions against Appellant under Federal
Rule of Civil Procedure 37(b)(2)(A)(vii).
Protective orders, such as the one at issue in this case,
operate as an agreement between the parties meant to pro-
mote an efficient discovery process, while safeguarding the
secrets and proprietary information of the parties. In ex-
change for the ability to review such information, outside
counsel agrees to protect against the disclosure of the
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STATIC MEDIA LLC v. LEADER ACCESSORIES LLC 3
confidential information to persons outside of that particu-
lar litigation. 1
Here, Appellant alleges that its disclosure was for the
purpose of facilitating a “more effective joint defense con-
sultation and discussion.” J.A. 98. In other words, Appel-
lant and the nonparty shared and discussed Appellee’s
confidential information to formulate a joint defense strat-
egy that would be used in both cases, not solely this action.
Even if Appellant believed that the disclosed information,
and the joint defense strategy formulated based on that
confidential disclosure, would be used only for the purposes
of this litigation, that belief was unreasonable and, in my
view, was a violation of the protective order. More specifi-
cally, on this record, it would be unreasonable for Appellant
to believe that Appellant could make the disclosure and
that the nonparty would not use that information, or the
joint defense strategy formulated based on the disclosed
confidential information, in the second litigation. Indeed,
in my view, Appellant was in violation of the protective or-
der independently of whether the information was eventu-
ally used in the second litigation. Accordingly, on this
record, I would conclude that the district court did not
abuse its discretion in determining that Appellant violated
the protective order.
1 For example, here, the protective order provides
that “[a]ll Confidential information and documents, along
with the information contained in the documents, shall be
used solely for the purpose of this action.” J.A. 42 (empha-
sis added).