Hitkansut LLC, a Michigan Corporation, & Acceledyne Technologies, Ltd., LLC, a Michigan Corporation v. United States ( 2013 )

In the United States Court of Federal Claims
No. 12-303C
(Filed: May 28, 2013)
********************************** ) Patent case; production in discovery of
) information related to or derived from
HITKANSUT LLC, a Michigan ) cooperative research and development
corporation, & ACCELEDYNE ) agreements; statutory protection against
TECHNOLOGIES, LTD., LLC, a ) disclosure; 15 U.S.C. § 3710a(c)(7);
Michigan corporation, ) inventor’s access to confidential technical
) information of opposing party
Plaintiffs, )
)
v. )
)
UNITED STATES, )
)
Defendant. )
)
**********************************
John S. Artz, Dickinson Wright, PLLC, Troy, Michigan, for plaintiffs. With him on the
briefs was J. Bradley Luchsinger, Dickinson Wright, PLLC, Troy, Michigan.
Gary L. Hausken, Assistant Director, Commercial Litigation Branch, Civil Division,
United States Department of Justice, Washington, D.C., for defendant. With him on the briefs
were Stuart F. Delery, Principal Deputy Assistant Attorney General, and John Fargo, Director,
Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington,
D.C.
OPINION AND ORDER
LETTOW, Judge.
Plaintiffs Hitkansut LLC and Acceledyne Technologies, Ltd., LLC (collectively,
“Hitkansut”) have moved to compel the production from the government of information related
to or derived from cooperative research and development agreements (“CRADAs”) to which the
government is a party. Hitkansut also asks the court to enter a protective order that grants
Ms. Donna Walker, a principal of both plaintiff corporations, access to confidential technical
information. The issues have been fully briefed, and a hearing was held on March 25, 2013. The
motion is accordingly ready for disposition.
BACKGROUND
Hitkansut filed suit in this court on May 10, 2012, alleging that the government had
infringed its patent, United States Patent No. 7,175,722 (“the ‘722 patent”), and seeking to
recover compensation for an allegedly infringing use by Oak Ridge National Laboratory (“Oak
Ridge” or “the government”). Compl. ¶¶ 1, 10. It contends that the ‘722 patent protects “a
method of achieving a desired physical property in a structure . . . through the concurrent
application of two different energies. . . . The first energy may be thermal energy (i.e. heat) and
the second energy may be mechanical vibration, sonic, laser, microwave, or magnetic energy.”
Brief in Support of Pls.’ Mot. to Compel and For Entry of a Protective Order (“Pls.’ Mot.”) at
1-2, ECF No. 11. Hitkansut alleges that Oak Ridge employs a thermomagnetic processing
means in research and in contractual CRADAs with private entities, and that research and those
contracts infringe the ‘722 patent. Id. at 2-3. The government disputes these claims. Resp. of
the United States to Pls.’ Mot. to Compel and for Entry of a Protective Order (“Def.’s Opp’n”) at
3, ECF No. 12.
After the suit progressed into the discovery phase, Hitkansut moved pursuant to Rule
37(a) of the Rules of the Court of Federal Claims (“RCFC”) to compel the production of
information derived from, and related to, CRADAs which were entered into by the government
with private, third-party partners. See Pls.’ Mot. at 2-3. 1 Hitkansut seeks to learn how the
government’s allegedly infringing “process was operated, under what parameters, [using] what
temperatures and what times.” Hr’g Tr. 6:11-21 (Mar. 25, 2013). It also seeks disclosure of
financial information related to the CRADAs because that information is “relevant to . . . a
determination of the amount of compensation owed to [Hitkansut] for any infringement and the
commercial success of the [thermomagnetic process at issue].” Pls.’ Mot. at 4; see also Hr’g Tr.
41:5-9. The government avers that it has withheld information provided by third-party CRADA
partners pursuant to a privilege set forth in Section 11 of the Stevenson-Wydler Technology
Innovation Act of 1980, Pub. L. No. 96-480, 94 Stat. 2311, as amended by the Federal
Technology Transfer Act, Pub. L. No. 99–502, 100 Stat 1785, 1797 (1986) (codified as amended
at 15 U.S.C. § 3710a) (“FTTA” or “the Act”), specifically at 15 U.S.C. § 3710a(c)(7). See Def.’s
Opp’n at 7.
1
A CRADA is defined by statute as
[A]ny agreement between one or more [f]ederal laboratories and
one or more non-[f]ederal parties under which the [g]overnment,
through its laboratories, provides personnel, services, facilities,
equipment, intellectual property, or other resources with or without
reimbursement (but not funds to non-[f]ederal parties) and the non-
[f]ederal parties provide funds, personnel, services, facilities,
equipment, intellectual property, or other resources toward the
conduct of specified research or development efforts which are
consistent with the missions of the laboratory; except that such
term does not include a procurement contract or cooperative
agreement as those terms are used in sections 6303, 6304, and
6305 of Title 31.
15 U.S.C. § 3710a(d)(1).
2
Hitkansut also asks the court to enter a protective order that permits its principal,
Ms. Walker, the inventor of the ‘722 patent, access to non-financial, confidential technical
information obtained in discovery from the government and third parties. Pls.’ Mot. at 11-12. It
argues that access by Ms. Walker is necessary for plaintiff to “evaluate technical information
concerning the accused thermomagnetic process. . . . Specialized knowledge of materials
science, metallurgy, physics, and mathematics all come into play in understanding this
pioneering technology. . . . [T]he advice of Ms. Walker is essential to the proper handling of this
litigation.” Id. at 11. The government opposes such a grant of access in a protective order,
arguing that Ms. Walker is a decisionmaker at and consultant to competitors of Oak Ridge and
its third-party partners, and thus should be barred from accessing proprietary information under
RCFC 26(c)(1). Def.’s Opp’n at 15, 17-21.
ANALYSIS
I. 15 U.S.C. § 3710a(c)(7)(A) and (B)
The FTTA authorizes the director of any laboratory operated by the federal government
to enter into CRADAs with private entities, in part to encourage transfer of technology from
federal government-operated laboratories to private industry. See 15 U.S.C. § 3710a(a)(1);
Chemical Serv., Inc. v. Environmental Monitoring Sys. Lab.-Cincinnati of the U.S. E.P.A., 12
F.3d 1256, 1258 (3d Cir. 1993). The statutory provision at issue in this instance, Paragraph
3710a(c)(7), provides two types of protection from disclosure for “trade secrets or commercial or
financial information that is privileged or confidential,” depending upon the source of the
information. See DeLorme Publ’g Co. v. National Oceanic and Atmospheric Admin. of the U.S.
Dep’t of Commerce, 917 F. Supp. 867, 872 (D. Maine 1996). Paragraph 3710a(c)(7) states:
(A) No trade secrets or commercial or financial information that is privileged or
confidential, under the meaning of section 552(b)(4) of Title 5 [the Freedom of
Information Act (“FOIA”)], which is obtained in the conduct of research or as a
result of activities under this chapter from a non-[f]ederal party participating in a
cooperative research and development agreement shall be disclosed.
(B) The director, or in the case of a contractor-operated laboratory, the agency, for
a period of up to 5 years after development of information that results from
research and development activities conducted under this chapter and that would
be a trade secret or commercial or financial information that is privileged or
confidential if the information had been obtained from a non-[f]ederal party
participating in a cooperative research and development agreement, may provide
appropriate protections against the dissemination of such information, including
exemption from subchapter II of chapter 5 of Title 5.
15 U.S.C. § 3710a(c)(7). Subparagraph (c)(7)(A) pertains to information obtained by or derived
from a private party participating in a CRADA, and Subparagraph (c)(7)(B) concerns
information belonging to the federal party. The decision in DeLorme applied the latter of these
provisions.
3
In DeLorme, a plaintiff sought disclosure under FOIA of electronic “raster” compilations
of National Oceanic and Atmospheric Administration’s (“NOAA’s”) nautical charts. 917 F.
Supp. at 870. Among other things, FOIA allows agencies to withhold records that are
“specifically exempted from disclosure by statute,” i.e., where a statute “(i) requires that the
matters be withheld from the public in such a manner as to leave no discretion on the issue; or
(ii) establishes particular criteria for withholding or refers to particular types of matters to be
withheld.” 5 U.S.C. § 552(b)(3)(A). The court in DeLorme explained that 15 U.S.C.
§ 3710a(c)(7) was such a statute limiting disclosure, and deemed NOAA’s raster compilations to
be commercial and confidential information that resulted from research and development
activities under the FTTA. 917 F. Supp. at 872-74. Thus, it held that NOAA, pursuant to
Subparagraph 3710a(c)(7)(B), was empowered to withhold its “raster” compilations for a period
of up to five years from the date of their development. Id. at 874.
Other cases have examined the first provision, Subparagraph 3710a(c)(7)(A), which
governs disclosure of qualifying information belonging to a private party to a CRADA. In
Spectrum Scis. & Software, Inc. v. United States, 84 Fed. Cl. 716 (2008), a private supplier
brought a breach of contract suit against the government, alleging that the Air Force breached the
terms of its CRADA by releasing the private supplier’s proprietary information. 84 Fed. Cl. at
734. The court’s decision opined that Subparagraph (A) of § 3710a(c)(7) “flatly prohibit[s]
agencies from disclosing private commercial information ‘obtained in the conduct of research
. . . from a non-[f]ederal party participating in a [CRADA].’” Id. at 737 (quoting 15 U.S.C.
§ 3710a(c)(7)(A)); see also Demodulation, Inc. v. United States, 103 Fed. Cl. 794 (upholding
subject matter jurisdiction over a patentee’s claim against the government for a government
contractor’s breach of a CRADA which prohibited disclosure of the patentee’s trade secrets and
proprietary technology); D’Andrea Bros. LLC v. United States, 96 Fed. Cl. 205 (2010)
(concluding that a CRADA was enforceable as a contract between the government and the
private partner).
As these cases illustrate, Paragraph 3710a(c)(7) provides two distinct protections for
qualifying information, which vary according to the source of the qualifying information. “[I]f
qualifying information is obtained from the CRADA’s private partner . . . it cannot be disclosed.
However, if qualifying information is obtained from the agency and would have been protected
if it had come from the private partner, the agency has the discretion to withhold it, but only for a
five-year period.” DeLorme, 917 F. Supp. at 872; see also Spectrum Scis., 84 Fed. Cl. at 734.
Hitkansut and the government diverge in their views of the relevance of the first of these
protections to this litigation. Hitkansut argues that the statute prohibits an agency from publicly
disclosing qualifying information of a private CRADA partner, but that the information should
be disclosed in discovery subject to a protective order. Pls.’ Mot. at 9-10. The government
contends that the plain language of Subparagraph 3710a(7)(A) “provides an absolute bar to the
[g]overnment’s production of [qualifying] trade secrets or commercial or financial information in
civil litigation.” Def.’s Opp’n at 4.
A. Privilege
RCFC 26(b)(1) states that “[p]arties may obtain discovery regarding any nonprivileged
matter that is relevant to any party’s claim or defense.” RCFC 26(b)(1) (emphasis added). The
4
rule, by its text, excludes from discovery information for which a privilege exists, such that
privileged “information may be withheld, even if relevant to the lawsuit and essential to the
establishment of plaintiff’s claim.” Baldrige v. Shapiro, 455 U.S. 345, 360 (1982). 2 “It is well
recognized that a privilege may be created by statute[, although a] statute granting a privilege is
to be strictly construed so as ‘to avoid a construction that would suppress otherwise competent
evidence.’” Id. (quoting St. Regis Paper Co. v. United States, 368 U.S. 208, 218 (1961)). When
inquiring whether a statute creates a privilege, courts “begin with the plain language of the
statute in question.” In re England, 375 F.3d 1169, 1177 (D.C. Cir. 2004) (Roberts, J.). If “the
statute’s language is plain, the sole function of the courts — at least where the disposition
required by the text is not absurd — is to enforce it according to its terms.” Hartford
Underwriters Ins. Co. v. Union Planters Bank, N.A., 530 U.S. 1, 6 (2000) (internal quotation
marks omitted) (quoting United States v. Ron Pair Enters., Inc., 489 U.S. 235, 241 (1989) (in
turn quoting Caminetti v. United States, 242 U.S. 470, 485 (1917))); see also Park ‘N Fly, Inc. v.
Dollar Park and Fly, Inc., 469 U.S. 189, 194 (1985) (“Statutory construction must begin with the
language employed by Congress and the assumption that the ordinary meaning of that language
accurately expresses the legislative purpose.”). A statute’s wording may be “awkward, and even
ungrammatical; but that does not make it ambiguous on the point at issue.” Lamie v. United
States Tr., 540 U.S. 526, 534 (2004); see also In re Any & All Funds or Other Assets in Brown
Bros. Harriman & Co. Account No. 8870792 in Name of Tiger Eye Invs., Ltd., 601 F. Supp. 2d
252, 259-60 (D.D.C. 2009), aff’d, 613 F.3d 1122 (D.C. Cir. 2010, superseded by statute on
other grounds, Preserving Foreign Criminal Assets for Forfeiture Act of 2010, Pub. L. No. 111-
342, 124 Stat. 3607, as recognized in In re Seizure of Approximately $12,116,153.63 & Accrued
Interest in U.S. Currency, __ F. Supp. 2d __, 2012 WL 5463306, at *6 (D.D.C. Nov. 9, 2012)).
In pertinent part, Subparagraph 3710a(c)(7)(A) states: “No trade secrets or commercial or
financial information that is privileged or confidential, under the meaning of section 552(b)(4) of
Title 5 [FOIA], which is obtained in the conduct of research or as a result of activities under this
chapter from a non-[f]ederal party participating in a cooperative research and development
agreement shall be disclosed.” The plain text of this provision connotes a bar to agency
disclosure of qualifying information obtained from a private party to a CRADA. 3 The reference
to FOIA serves to define the scope of protected information; it does not signify that the statutory
bar on disclosure pertains only to an agency’s responses to requests made under FOIA. To the
contrary, the prohibition against disclosure exists broadly in Subparagraph 3710a(c)(7)(A). That
2
The RCFC generally mirror the Federal Rules of Civil Procedure. See RCFC 2002 Rules
Committee Note (“[I]nterpretation of the court's rules will be guided by case law and the
Advisory Committee Notes that accompany the Federal Rules of Civil Procedure.”). RCFC
26(b)(1) is nearly identical to Fed. R. Civ. P. 26(b)(1), and the court consequently will rely on
cases interpreting Fed. R. Civ. P. 26 in its inquiry and analysis.
3
Final CRADA reports generally are made publicly available. See, e.g., Hr’g Tr. 39:22-
24; Information Bridge: Department of Energy Office of Scientific & Technical Information,
available at http://www.osti.gov/bridge (last visited May 24, 2013). The government submitted
to the court final CRADA reports that are publicly available. The parties, however, have not
provided the court with the text of any of the CRADAs that underpin those reports or, indeed,
any CRADAs whatsoever.
5
breadth “indicates that Congress intended the confidentiality provision[] to constitute a
‘privilege’ within the meaning of the [RCFC].” Baldrige, 455 U.S. at 361. Because the statute is
“unambiguous, judicial inquiry is complete, and resort to the more controversial realm of
legislative history is unnecessary.” In re England, 375 F.3d at 1178 (internal citations omitted). 4
In sum, information qualifying for protection under Subparagraph 3710a(c)(7)(A) may not be
obtained from the government through discovery in civil litigation. 5 The government may
therefore withhold production of qualifying information on the basis of this statutory privilege. 6
In contrast to the prohibition embodied in Subparagraph 3710a(c)(7)(A), the plain
language of Subparagraph 3710a(c)(7)(B) is permissive, not categorical. It states that an agency
“may provide appropriate protections against the dissemination of [qualifying agency]
information, including exemption from [FOIA,]” for up to five years after development of such
information. 15 U.S.C. § 3710a(c)(7)(B). As written, this provision provides no mandate that
would give rise to a cognizable privilege. See Baldrige, 455 U.S. at 360 (“It is well recognized
that a privilege may be created by statute[, although a] statute granting a privilege is to be strictly
construed so as ‘to avoid a construction that would suppress otherwise competent evidence.’”
(quoting St. Regis Paper, 368 U.S. at 218)). Rather, it allows the government to avail itself of a
limited protection, i.e., an exemption from disclosure under FOIA for a finite time period, to
safeguard its qualifying research information and avoid public dissemination. It does not create
a privilege for such information during civil discovery, where a protective order may provide
appropriate protections against public distribution.
4
In all events, the legislative history is confirmatory because it indicates that
Subparagraph 3710a(c)(7)(A) was structured such that “non-participating companies would not
be able to obtain the [private partner’s confidential] information from the government or the
[government-owned contractor-operated laboratory] operator under FOIA or otherwise.” H.R.
Rep. No. 101-331 (1989) (Conf. Rep.), reprinted in 1989 U.S.C.C.A.N. 977, 1150-51, and at
1989 WL 168132 (emphasis added).
5
It is of no consequence that Subparagraph 3710a(c)(7)(A) does not refer specifically to a
prohibition on disclosure in civil discovery. See In re England, 375 F.3d at 1179 (rejecting an
approach to statutory construction that requires such specificity and citing PGA Tour, Inc. v.
Martin, 532 U.S. 661, 689 (2001) (“[T]he fact that a statute can be applied in situations not
expressly anticipated by Congress does not demonstrate ambiguity. It demonstrates breadth.”
(citations omitted))); Consumer Elecs. Ass’n v. FCC, 347 F.3d 291, 298 (D.C. Cir. 2003) (“[T]he
Supreme Court has consistently instructed that statutes written in broad, sweeping language
should be given broad, sweeping application.”).
6
As with other claims of privilege made during civil litigation, however, the withholding
party must make the claim of privilege and “describe the nature of the documents,
communications, or tangible things not produced or disclosed.” RCFC 26(b)(5)(ii). This
requirement “is commonly satisfied by filing a privilege log.” Wolk v. Green, No. C06-5025 BZ,
2007 WL 3203050, at *2 (N.D. Cal. Oct. 29, 2007). Apparently no privilege log has yet to be
submitted by the government in this case, although documents and records subject to the
government’s statutory privilege claim pursuant to Subparagraph 3710a(c)(7)(A) should be
included within such a log.
6
B. The Scope of Information Protected Under Subparagraph 3710a(c)(7)(A)
15 U.S.C. § 3710a(c)(7)(A) prohibits governmental disclosure of “trade secrets or
commercial or financial information that is privileged or confidential . . . which is obtained in the
conduct of research or as a result of activities under [the Technology Innovation chapter of Title
15, 15 U.S.C. §§ 3701-3722] from a non-[f]ederal party participating in a cooperative research
and development agreement.” 7 The Subparagraph first limits the scope of protection to
information belonging to a non-federal entity that is a signatory to a CRADA. Information
“obtained in the conduct of research” after a CRADA has been signed is protected by the plain
language of the provision. The salient issue is the breadth of the phrase that follows, which
protects qualifying information obtained “as a result of activities under” the chapter. The statute
does not specify what these activities might be, although the chapter encompasses research
conducted via grants or cooperative agreements designed to promote technology development
and efforts to “stimulat[e] improved utilization of federally funded technology developments,
including inventions, software, and training technologies, by [s]tate and local governments and
the private sector.” 15 U.S.C. § 3702(3); see also 15 U.S.C. §§ 3701-3722. The broad scope of
the chapter indicates that a range of “activities under” the chapter could produce or generate
pertinent information, including information that might be obtained prior to the signing of a
CRADA with a view to potential participation in a CRADA.
The legislative history pertaining to 15 U.S.C. § 3710a(c)(7) supports such a reading. It
states that the provision is designed to “exempt from public disclosure certain information
brought into a CRADA or generated under a CRADA.” H.R. Rep. No. 101-331 at 761,
reprinted at 1989 U.S.C.C.A.N. at 1150-51 (emphasis added). The DeLorme court
acknowledged the breadth of 15 U.S.C. § 3710a(c)(7) in interpreting Subparagraph
3710a(c)(7)(B), which provides limited protection to qualifying government information “that
results from research and development activities conducted under [the] chapter.” The court, after
considering the language of the statute and legislative history, concluded that the phrase
“conducted under” “is obviously broad and not limited to what happens after a particular
CRADA is signed . . . [such that government files] created in anticipation of [a] CRADA qualify
as ‘activities conducted under’ the Technology Innovation chapter.” DeLorme, 917 F. Supp. at
873. This court concurs and concludes that Subparagraph 3710a(c)(7)(A) protects qualifying
information that pertains to a CRADA and is disclosed by a non-federal party in negotiations,
discussions, and submissions that occur or are made prior to the signing of a CRADA, whether
or not that information is stated in the CRADA, as well as information provided by the party
after the CRADA has been executed.
Subparagraph 3710a(c)(7)(A) limits protection to “trade secrets or commercial or
financial information that is privileged or confidential, under the meaning of [FOIA Exemption
7
The parties have not presented arguments concerning what might occur if Hitkansut
seeks third-party discovery from private parties to CRADAs. The government submits that the
privilege provided by Subparagraph 3710a(c)(7)(A) only pertains to governmental disclosure of
private-party information and does not necessarily shelter from disclosure information in the
hands of third parties. Def.’s Opp’n at 10 n.1.
7
4, 5 U.S.C. § 552(b)(4)].” 15 U.S.C. § 3710a(c)(7)(A). Accordingly, to assess the scope of the
Subparagraph, the court must look to precedents that define and apply the relevant terms as used
in Exemption 4 of FOIA. For the purposes of FOIA, courts have defined trade secret “as a
secret, commercially valuable plan, formula, process, or device that is used for the making,
preparing, compounding, or processing of trade commodities and that can be said to be the end
product of either innovation or substantial effort.” Public Citizen Health Research Grp. v. Food
& Drug Admin., 704 F.2d 1280, 1288 (D.C. Cir. 1983); see also Anderson v. Department of
Health & Human Servs., 907 F.2d 936, 943-44 (10th Cir. 1990). The terms “commercial” or
“financial” are to be given their ordinary meanings, National Ass’n of Home Builders v. Norton,
309 F.3d 26, 38 (D.C. Cir. 2002), and are construed broadly, Soghoian v. Office of Mgmt. &
Budget, __ F. Supp. 2d __, __, 2013 WL 1201488, at *3 (D.D.C. Mar. 26, 2013); COMPTEL v.
FCC, __ F. Supp. 2d __, __, 2012 WL 6604528, at *7 (D.D.C. Dec. 19, 2012). Commercial
information “need not be limited to information that ‘reveal[s] basic commercial operations,’ but
may include any information in which the submitter has a ‘commercial interest,’ such as business
sales statistics, research data, overhead and operating costs, and financial conditions.”
COMPTEL, 2012 WL 6604528, at *7 (internal citation omitted) (quoting Public Citizen Health
Research Grp., 705 F.2d at 1290); see also DeLorme, 917 F. Supp. at 873. Nonetheless,
commercial or financial information also must be privileged or confidential to be protected.
Information voluntarily submitted 8 to the government is confidential “if it is of a kind that would
customarily not be released to the public by the person from whom it was obtained.” Critical
Mass Energy Project v. Nuclear Regulatory Comm’n, 975 F.2d 871, 879 (D.C. Cir. 1992); see
also United Techs. Corp. v. United States Dep’t of Def., 601 F.3d 557, 559 n.3 (D.C. Cir. 2010);
COMPTEL, 2012 WL 6604528, at *7. This is an objective test, and the government bears the
burden of proving the custom of a provider. Critical Mass, 975 F.2d at 879.
In this instance, the government asserts that a broad range of commercial and financial
information provided by private CRADA partners is confidential within the meaning of
Subparagraph 3710a(c)(7)(A). See Hr’g Tr. 23:23 to 24:12; 33:4-16. In particular, the
government contends that the provision protects against disclosure the amount of payments made
by private CRADA partners to finance research under a CRADA because these contributions are
“financial information . . . obtained in a CRADA arrangement.” Hr’g Tr. 29:15 to 30:14. To
support its position, the government has provided the declaration of an employee at Eaton Corp.
(the “Eaton declaration”). See Def.’s Opp’n, App. at A35-38. Two CRADAs between Eaton
Corp. and the government apparently contain information that Hitkansut is seeking in connection
with this case. See Def.’s Opp’n, App. at A35-36. The Eaton declaration asserts that the
company has disclosed two categories of confidential information to the government in
connection with its CRADAs:
(i) technical information, know-how and trade secrets; and
(ii) business and commercial projections that disclose
important competitive information about Eaton’s view of
the market for its own future projects. The confidential
technical information includes the material specifications,
8
CRADAs are agreements that are voluntarily entered into by the government and a
private party.
8
manufacturing process mechanisms or tooling that could be
utilized. The competitive information includes an
identification and number of parts that could have been
manufactured using the technology and manufacturing
costs.
Def.’s Opp’n, App. at A36 (emphasis added).
The court accepts that such technical information and commercial projections are
commercial or financial information, and that this information is confidential because it would
not customarily be released publicly by a private CRADA partner. Contrastingly, simple
transactional data, such as payments made by a CRADA partner to the government, are not
encompassed within either of the categories delineated by the Eaton declaration. Final or
incremental payments made to the government by a private party under a CRADA are not,
standing alone, commercial projections of a financial nature as described by the Eaton
declaration. The government has not offered any other evidence that suggests its partners would
ordinarily keep confidential information about such payments. Consequently, the court
concludes that payments made by CRADA partners to the government are not confidential
information protected by Subparagraph 3710a(c)(7)(A).
II. Scope of Protective Order
Hitkansut’s request that a protective order permit Ms. Walker, its principal, access to
proprietary technical information produced by the government in the course of this litigation
rests on the contention that her participation is necessary to enable plaintiffs to conduct a proper
infringement evaluation. See Pls.’ Mot. at 11. Hitkansut contends that such an evaluation
requires “a thorough analysis of a highly specialized and technical material processing field.” Id.Hitkansut states that the government is quite familiar with Ms. Walker because it previously
entrusted her with confidential information when it executed a nondisclosure agreement with her
in connection with her work as a guest researcher at Oak Ridge. See Pls.’ Mot. at 15-16. The
government counters that Ms. Walker is a decisionmaker and consultant to companies which
compete with Oak Ridge and its CRADA partners, and it urges that she be denied access to
proprietary information subject to the protective order. See Def.’s Opp’n at 15, 19-20.
RCFC 26(c)(1) allows the court, for good cause, to “issue an order to protect a party or
person from annoyance, embarrassment, oppression, or undue burden or expense, including . . .
requiring that a trade secret or other confidential research, development, or commercial
information not be revealed or be revealed only in a specified way.” “[T]here is no absolute
privilege for trade secrets and similar confidential information.” Federal Open Mkt. Comm. of
Fed. Reserve Sys. v. Merrill, 443 U.S. 340, 362 (1979) (quoting 8 Charles Alan Wright & Arthur
R. Miller, Federal Practice and Procedure § 2043, p. 300 (1970)). The party resisting discovery
must first establish that the information sought is a trade secret or other confidential information
under the Rule and demonstrate that its disclosure might be harmful. See Centurion Indus., Inc.
v. Warren Steurer & Assocs., 665 F.2d 323, 325 (10th Cir. 1981). If that showing has been
made, the burden then shifts to the party seeking discovery to establish that the disclosure of
trade secrets or other confidential information is relevant and necessary to the action. Id. The
9
court must balance the need for the trade secrets or other confidential information against the
claim of injury resulting from disclosure. Id.; see also MGP Ingredients, Inc. v. Mars, Inc., 245
F.R.D. 497, 500 (D. Kan. 2007).
In practice, “orders forbidding any disclosure of trade secrets or confidential commercial
information are rare. More commonly, the trial court will enter a protective order restricting
disclosure to counsel, or to the parties.” Federal Open Mkt. Comm., 443 U.S. at 362 n.24
(internal citations omitted). Such a statement holds true in this instance. Hitkansut and the
government have agreed that proprietary information will be produced in discovery, and that
entry of a protective order is appropriate; they only diverge on whether Ms. Walker should be
permitted access to trade secrets or other proprietary technical information produced by the
government. See Def.’s Opp’n at 17; Pls.’ Mot. at 12. The Federal Circuit has noted that
“[m]eaningful increments of protection are achievable in the design of a protective order. It may
be that particular circumstances may require specific provisions in such orders. . . . In a
particular case, e.g., where [corporate employees] are involved in competitive decisionmaking, it
may well be that a party seeking access should be forced to retain outside counsel or be denied
the access recognized as needed.” United States Steel Corp. v. United States, 730 F.2d 1465,
1468 (Fed. Cir. 1984); see also Ross-Hime Designs, Inc. v. United States, 109 Fed. Cl. 725, 742-
44 (2013) (ruling that access to protected information would not be granted to plaintiff’s
president who was likely to be involved in competitive decision-making). Courts presiding over
patent cases have often crafted protective orders that address the need to limit access to protected
technical information. In that context, the court finds instructive the analysis in Safe Flight
Instrument Corp. v. Sundstrand Data Control Inc., 682 F. Supp. 20 (D. Del. 1988).
The plaintiff in Safe Flight sought a protective order that would allow Safe Flight’s
president to examine scientific documents that the defendant considered confidential. 682 F.
Supp. at 21. Safe Flight posited that its president was “‘uniquely qualified’ to assess the
documents,” id., much as Hitkansut argues here. The defendant objected on the basis that the
president was at the helm of a company with which it was in direct competition, and that the
information could be abused to the competitive detriment of the defendant. Id. The court
refused to allow Safe Flight’s president access to the information at issue, applying a line of
judicial precedent that approved of protective orders restricting disclosure of technical
information only to the receiving party’s trial attorneys and independent experts assisting them.
Id. at 22 (providing an overview of cases that had approved of such agreements). The Safe
Flight court noted that the plaintiff company’s president was a competitor in defendant’s market,
and “question[ed] his human ability during future years of research to separate the applications
he has extrapolated from [defendant’s] documents from those he develops from his own ideas.”
Id. It discounted Safe Flight’s alleged need for its president to examine technical information,
suggesting that the plaintiff “investigate the availability of qualified outside experts” or
“nominate a non-technical officer to make such a business calculation [regarding the economic
merits of the litigation] in light of his[ or ]her review of the confidential documents, rather than
an officer who is also a working scientist of the corporation.” Id.Other courts have entered similar orders based on the rationale espoused in Safe Flight.
See, e.g., Northbrook Digital, LLC v. Vendio Servs., Inc., 625 F. Supp. 2d 728, 735, 743 (D.
Minn. 2008) (determining that a company’s owner, who was also an attorney, could not have
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access to proprietary information under the protective order because his “activities [related to]
prosecuting continuation applications related to the patents in suit [were] not compatible with
allowing him to review, either as an attorney or as an expert witness, [defendant’s] confidential
technical information”); Tailored Lighting, Inc. v. Osram Sylvania Prods., Inc., 236 F.R.D. 146,
149 (W.D.N.Y. 2006) (concluding that a company’s president should not have access to certain
confidential information provided by defendant, an opposing patent holder, in part because it
would be “unreasonable to expect that anyone working to further his own scientific and
technological interests would be able assuredly to avoid even the subconscious use of
confidential information revealed through discovery that is relevant to those interests”); cf.
Medtronic Sofamor Danek, Inc. v. Michelson, No. 01-2373-GV, 2002 WL 33003691, at *3-4
(W.D. Tenn. Jan. 30, 2002) (distinguishing Safe Flight and allowing defendant inventor to
examine confidential technical information because he did not initiate the lawsuit and should be
allowed to defend himself, he had previously served as an expert witness for plaintiff and had
access to its other confidential information, and he was not in direct competition with plaintiff).
These past analyses are instructive as this court balances Hitkansut’s claim that
Ms. Walker must have access to the government’s confidential information to enable plaintiff to
conduct a proper infringement analysis, Pls.’ Mot. at 11, against the government’s claim that a
grant of such access would harm the business interests of CRADA partners and the ability of
government laboratories to form partnerships with private companies for the purpose of
technology transfer, see Def.’s Opp’n at 23-25. Ms. Walker owns a consulting business that is
built around her knowledge of the processes at issue in this patent litigation. See Hr’g Tr. 49:4-7.
Knowledge of Oak Ridge’s confidential technical information could give Ms. Walker and her
customers a competitive advantage in the field. Hitkansut argues that Ms. Walker would be
required to keep Oak Ridge’s information confidential, thus ameliorating any threat of
competitive harm to Oak Ridge or its CRADA partners. See Hr’g Tr. 50:14-20. As in Safe
Flight, adhering to such a promise presumably would require Ms. Walker to compartmentalize
confidential information from her future thought processes. Even accepting that Ms. Walker
would make a conscious and sustained effort to comply with the terms of the protective order,
the fallibility of the human brain is paramount. It is simply impossible for a human being to
segregate, or “unlearn,” certain pieces of knowledge. Furthermore, Hitkansut has not made a
sufficient showing of need in connection with its request for access by Ms. Walker. It concedes
that independent experts exist who would be capable of understanding “the ultimate issues” and
Ms. Walker’s specialized work. Hr’g Tr. 48:6-25. Although the hiring of such an expert may
add to litigation costs, Hitkansut initiated this lawsuit and must bear the usual costs of
infringement litigation. In short, the harm to the government and its partners outweighs
plaintiffs’ need for a grant of access to Ms. Walker. Accordingly, the terms of the protective
order will not permit Ms. Walker to review proprietary technical information provided by the
government in this case. The parties should confer and provide the court with a stipulated
protective order in light of this decision.
CONCLUSION
Plaintiffs’ motion to compel and for entry of a protective order is GRANTED IN PART
and DENIED IN PART. It is granted insofar as the government is required to provide access to
CRADA agreements, with redaction of confidential technical information and market projections
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supplied by or belonging to the private partners, but with no redaction of the amounts of
payments by the private partners to the government. The government shall also supply plaintiffs
with a privilege log covering information not disclosed pursuant to the privilege based upon 15
U.S.C. § 3710a(c)(7)(A) or any other privilege or protection that might be applicable. Plaintiffs’
motion is denied insofar as privileged information under Subparagraph 3710a(c)(7)(A) is
concerned. It is also denied insofar as plaintiffs seek to enable Ms. Walker to have access to
confidential technical information. The court orders the parties to confer and provide the court
with a stipulated protective order within 20 days of entry of this opinion and order.
It is so ORDERED.
s/ Charles F. Lettow
Charles F. Lettow
Judge
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