United States Court of Appeals
for the Federal Circuit
__________________________
IN RE DEUTSCHE BANK TRUST COMPANY
AMERICAS AND TOTAL BANK SOLUTIONS, LLC
Petitioners.
__________________________
Miscellaneous Docket No. 920
__________________________
On Petition for a Writ of Mandamus to the United States
District Court for the Southern District of New York, Case
No. 1:09-CV-02675, Judge Victor Marrero.
__________________________
ON PETITION FOR WRIT OF MANDAMUS
__________________________
Before MICHEL, Chief Judge, LINN, and PROST, Circuit
Judges.
LINN, Circuit Judge.
ORDER
Deutsche Bank Trust Company Americas and Total
Bank Solutions, LLC (collectively, “Deutsche”) petition for
a writ of mandamus directing the United States District
Court for the Southern District of New York to vacate its
order exempting Charles Macedo (“Macedo”), the lead
litigation counsel of Island Intellectual Property LLC,
LIDS Capital LLC, Double Rock Corporation, and In-
trasweep LLC (collectively, “Island”) from the patent
IN RE DEUTSCHE BANK 2
prosecution bar applied to other litigation counsel for
Island in the case. Island Intellectual Prop., LLC v.
Deutsche Bank AG, 658 F. Supp. 2d 615 (S.D.N.Y. 2009)
(“Opinion”). Island opposes.
Because this petition presents an important issue of
first impression in which courts have disagreed, we grant-
in-part Deutsche’s petition to vacate the district court’s
order, and remand the case to the district court for recon-
sideration of its order under the standards articulated
herein.
I
This petition stems from a patent infringement suit
filed in the Southern District of New York by Island
asserting three patents relating to financial deposit-sweep
services: U.S. Patents No. 7,509,286, No. 7,519,551, and
No. 7,536,350. All three of the asserted patents resulted
from continuation-in-part applications filed from a com-
mon parent application, now U.S. Patent No. 6,374,231.
Island also has nineteen pending applications related to
this family of patents through continuations and con-
tinuations-in-part. At least fifteen of these applications
are unpublished.
On August 19, 2009, Deutsche sought a protective or-
der including a patent prosecution bar preventing anyone
who gains access in the litigation to documents marked
“confidential – patent prosecution bar” from any involve-
ment in prosecuting any patent in the area of “deposit
sweep services” during, and for a limited period after, the
conclusion of this litigation. After a very short hearing,
and without a written opinion, the magistrate judge
assigned to the case granted Deutsche’s request as to all
of Island’s trial counsel, but exempted Macedo, Island’s
lead trial counsel.
Deutsche moved to reconsider the magistrate judge’s
order. After full briefing on the issue, Deutsch’s motion
3 IN RE DEUTSCHE BANK
was denied. Island Intellectual Prop., LLC v. Deutsche
Bank AG, No. 09-CV-02675 (S.D.N.Y. Sept. 23, 2009)
(“Reconsideration Order”). Deutsche then filed objections
to the magistrate judge’s order with the district court.
Pending the district court’s decision, the magistrate judge
issued an interim protective order containing a patent
prosecution bar (“Interim Protective Order”). Island
Intellectual Prop., LLC v. Deutsche Bank AG, No. 09-CV-
02675 (S.D.N.Y. Oct. 27, 2009) (“Interim Order”). The
Interim Protective Order gave Macedo the choice of either
not reviewing the applicable confidential material or
being barred from prosecuting patents pertaining to
financial services involving sweep functions. Specifically,
the Interim Protective Order identifies the information
that triggers a bar as follows:
The designation “CONFIDENTIAL – PATENT
PROSECUTION BAR” may be applied by a party
to information of the type that can be included in
a patent application and form the basis or part of
the basis for a claim or claims thereof, which it be-
lieves in good faith to constitute confidential or
trade secret information, the disclosure of which
to a person engaged in or otherwise assisting in
patent prosecution in the technical areas to which
the information relates would create a substantial
risk of injury to the disclosing party.
Id. at 2.
The Interim Protective Order describes the extent of the
bar as follows:
No individual that receives information desig-
nated “CONFIDENTIAL – PATENT
PROSECUTION BAR” shall give advice or par-
ticipate, supervise or assist in the prosecution of
patents pertaining to financial services involving
sweep functions during the pendency of the pre-
IN RE DEUTSCHE BANK 4
sent action and for one calendar year after the
conclusion of the present litigation, including any
appeals.
Id. at 5.
The district court, on review, held that the magistrate
judge’s reconsideration order was not clearly erroneous or
contrary to law and adopted it in its entirety. Opinion at
621. The district court ordered that the Interim Protec-
tive Order would be lifted on November 25, 2009. How-
ever, this order was temporarily stayed to allow Deutsche
to seek an emergency stay in this court. This petition
followed, which automatically lifted the temporary stay.
Deutsche also filed an emergency motion requesting a
further stay, pending appeal, of the district court’s order
to lift the Interim Protective Order. We granted
Deutsche’s motion.
II
The remedy of mandamus is available only in ex-
traordinary situations to correct a clear abuse of discre-
tion or usurpation of judicial power. See In re Regents of
the Univ. of Cal., 101 F.3d 1386, 1387 (Fed. Cir. 1996). A
party seeking a writ bears the burden of proving that it
has no other means of obtaining the relief desired, Mal-
lard v. U.S. Dist. Court for S. Dist. of Iowa, 490 U.S. 296,
309 (1989), and that the right to issuance of the writ is
“clear and indisputable,” Allied Chemical Corp. v. Daiflon,
Inc., 449 U.S. 33, 35 (1980).
Final decisions concerning discovery matters are re-
viewed by this court under the abuse of discretion stan-
dard. Cygnus Therapeutics Sys. v. ALZA Corp., 92 F.3d
1153, 1161 n.2 (Fed. Cir. 1996); Heat & Control, Inc. v.
Hester Indus., Inc., 785 F.2d 1017, 1022 (Fed. Cir. 1986).
Although rare, it is not impossible to grant the remedy of
mandamus where a matter under review is committed to
the district court’s discretion. See Allied Chem., 449 U.S.
5 IN RE DEUTSCHE BANK
at 36 (stating that mandamus is “hardly ever” available in
cases where the district court’s decision is a matter of
discretion). Specifically, we have granted mandamus
review of discovery orders when the petition presented an
important issue of first impression or one in which courts
have disagreed. See, e.g., In re United States, 590 F.3d
1305, 1308 (Fed. Cir. 2009); In re Seagate Tech., LLC, 497
F.3d 1360, 1367 (Fed. Cir. 2007) (en banc); Regents of the
Univ. of Cal., 101 F.3d at 1387.
III
As a threshold issue, we address whether to apply
Second Circuit law or Federal Circuit law to the question
before us. “[W]e have generally deferred to regional
circuit law when the issue involves an interpretation of
the Federal Rules of Civil Procedure.” Manildra Milling
Corp. v. Ogilvie Mills, Inc., 76 F.3d 1178, 1181-82 (Fed.
Cir. 1996). However, we have also held that Federal
Circuit law applies to discovery matters if the determina-
tion implicates an issue of substantive patent law. Ad-
vanced Cardiovascular Sys., Inc. v. Medtronic, Inc., 265
F.3d 1294, 1307-08 (Fed. Cir. 2001); In re Spalding Sports
Worldwide, Inc., 203 F.3d 800, 803 (Fed. Cir. 2000). In
deciding which law to apply, we consider several factors
including: “the uniformity in regional circuit law, the need
to promote uniformity in the outcome of patent litigation,
and the nature of the legal issue involved.” Manildra
Milling, 76 F.3d at 1181.
A determination of whether a trial lawyer should be
denied access to information under a protective order
because of his additional role in patent prosecution, or
alternatively be barred from representing clients in
certain matters before the U.S. Patent and Trademark
Office (“PTO”), is an issue unique to patent law. More-
over, and as discussed below, there is a noted lack of
uniformity among district courts around the country
about whether and under what circumstances a patent
IN RE DEUTSCHE BANK 6
prosecution bar should be applied. See generally David
Hrick, How Things Snowball: The Ethical Responsibilities
and Liability Risks Arising from Representing a Single
Client in Multiple Patent-Related Representations, 18 Geo.
J. Legal Ethics 421, 442 (2005) (stating that the question
of whether attorneys who prosecute patents may be
barred from access to certain sensitive discovery “has split
the courts”). Applying regional circuit law to this ques-
tion is likely to produce differing results depending on the
regional circuit in which the case originated. See High-
way Equip. Co., Inc. v. FECO, Ltd., 469 F.3d 1027, 1032
(Fed. Cir. 2006) (finding that Federal Circuit law, as
opposed to Eighth Circuit law, applied to what effect a
dismissal with prejudice has on the legal requirements
under 35 U.S.C. § 285 because otherwise the law might
vary by regional circuit). Given the unique relationship of
this issue to patent law, and the importance of establish-
ing a uniform standard, we hold that the determination of
whether a protective order should include a patent prose-
cution bar is a matter governed by Federal Circuit law.
IV
A
A party seeking a protective order carries the burden
of showing good cause for its issuance. See Fed. R. Civ. P.
26(c); Truswal Sys. Corp. v. Hydro-Air Eng’g, Inc., 813
F.2d 1207, 1209-10 (Fed. Cir. 1987). The same is true for
a party seeking to include in a protective order a provision
effecting a patent prosecution bar. Typically, protective
orders include provisions specifying that designated
confidential information may be used only for purposes of
the current litigation. Such provisions are generally
accepted as an effective way of protecting sensitive infor-
mation while granting trial counsel limited access to it for
purposes of the litigation. Courts have recognized, how-
ever, that there may be circumstances in which even the
most rigorous efforts of the recipient of such information
7 IN RE DEUTSCHE BANK
to preserve confidentiality in compliance with the provi-
sions of such a protective order may not prevent inadver-
tent compromise. As aptly stated by the District of
Columbia Circuit, “[I]t is very difficult for the human
mind to compartmentalize and selectively suppress in-
formation once learned, no matter how well-intentioned
the effort may be to do so.” See FTC v. Exxon Corp., 636
F.2d 1336, 1350 (D.C. Cir. 1980).
We first addressed this subject in U.S. Steel Corp. v.
United States, 730 F.2d 1465 (Fed. Cir. 1984), a case
involving the antidumping laws. In that case the Court of
International Trade (“CIT”) denied in-house counsel
access to certain confidential information, concluding that
the information at issue was “extremely potent” confiden-
tial information and of such a nature that it would be
“humanly impossible” to control its inadvertent disclosure
by in-house counsel. Id. at 1467. While acknowledging
that the CIT’s “well-taken concern for the nature and
scope of the information would be eminently applicable to
. . . the crafting of a suitable protective order,” we held
that “it was error to deny access solely because of in-house
counsel’s ‘general position.’” Id. We stated that
“[w]hether an unacceptable opportunity for inadvertent
disclosure exists . . . must be determined . . . by the facts
on a counsel-by-counsel basis . . . .” Id. at 1468. We went
on to hold that the counsel-by-counsel determination
should turn on the extent to which counsel is involved in
“competitive decisionmaking” with its client. Id.
We defined competitive decisionmaking as:
[S]horthand for a counsel’s activities, association,
and relationship with a client that are such as to
involve counsel’s advice and participation in any
or all of the client’s decisions (pricing, product de-
sign, etc.) made in light of similar or correspond-
ing information about a competitor.
IN RE DEUTSCHE BANK 8
Id. at 1468 n.3. Although pricing and product design
were listed as specific exemplars of activity involving
competitive decisionmaking, subsequent opinions have
recognized that they are only two activities that might
implicate or involve competitive decisionmaking. See
Cummins-Allison Corp. v. Glory Ltd., No. 02-CV-7008,
2003 U.S. Dist. LEXIS 23653, at *14 (N.D. Ill. Dec. 31,
2003) (“Plainly, the U.S. Steel court’s listing of client
decisions was not limited to ‘pricing and product design.’
The court’s use of ‘etc.’ reveals that those are only exam-
ples of the kinds of client decisions that may be made ‘in
light of similar or corresponding information about a
competitor.’”).
The concern over inadvertent disclosure manifests it-
self in patent infringement cases when trial counsel also
represent the same client in prosecuting patent applica-
tions before the PTO. Since the decision in U.S. Steel,
patent prosecution bars have been considered in a num-
ber of patent infringement cases. However, other than
our unpublished decision in In re Sibia Neurosciences,
Inc., No. 525, 1997 WL 688174, 1997 U.S. App. LEXIS
31828 (Fed. Cir. Oct. 22, 1997) (Table), this Court has not
addressed the precise question of when an attorney’s
activities in prosecuting patents on behalf of a client
raises an unacceptable risk of inadvertent disclosure.
While there is general agreement that the competitive
decisionmaking test articulated in U.S. Steel is the correct
standard, the district courts have developed divergent
views on whether and to what extent patent prosecution
activities entail competitive decisionmaking. See James
Juo & David J. Pitman, A Prosecution Bar in Patent
Litigation Should be the Exception Rather Than the Rule,
15 Va. J.L. & Tech. 43 (2010) (containing a comprehensive
collection of the two lines of trial court decisions).
Some district courts have held that patent prosecution
inherently involves competitive decisionmaking. See, e.g.,
9 IN RE DEUTSCHE BANK
Cummins-Allison Corp. v. Glory Ltd., No. 02-CV-7008,
2003 U.S. Dist. LEXIS 23653, at *24 (N.D. Ill. Jan. 2,
2004); Mikohn Gaming Corp. v. Acres Gaming Inc., 50
USPQ2d 1783, 1786 (D. Nev. 1998) (finding that since the
client “has made a considerable investment in [its litiga-
tion and prosecution attorney’s] technical training” there
is no doubt that the attorney “works very closely with and
advises Acres on matters relating to product design”);
Motorola, Inc. v. Interdigital Tech. Corp., No. 93-CV-488,
1994 WL 16189689, 1994 U.S. Dist. LEXIS 20714 (D. Del.
Dec. 19, 1994). Other courts hold that patent prosecution,
by itself, does not raise a presumption of an unacceptable
risk of inadvertent disclosure. See, e.g., Avocent Redmond
Corp. v. Rose Elecs., Inc., 242 F.R.D. 574 (W.D. Wa. 2007);
Trading Techs. Int’l, Inc. v. Espeed, Inc., No. 04-CV-5312,
2004 WL 2534389, 2004 U.S. Dist. LEXIS 19429 (N.D. Ill.
Sept. 24, 2004); MedImmune, Inc. v. Centocor, Inc., 271 F.
Supp. 2d 762 (D. Md. 2003).
Because patent prosecution is not a one-dimensional
endeavor and can encompass a range of activities, it is
shortsighted to conclude that every patent prosecution
attorney is necessarily involved in competitive decision-
making. Indeed, “denying access to [a party’s] outside
counsel on the ground that they also prosecute patents for
[that party] is the type of generalization counseled
against in U.S. Steel. The facts, not the category must
inform the result. Our holding in U.S. Steel dictates that
each case should be decided based on the specific facts
involved therein.” Sibia, 1997 WL 688174, at *3, 1997
U.S. App. LEXIS 31828, at *7.
Some attorneys involved in patent litigation, for ex-
ample, may have patent prosecution duties that involve
little more than reporting office actions or filing ancillary
paperwork, such as sequence listings, formal drawings, or
information disclosure statements. Similarly, some
attorneys may be involved in high-altitude oversight of
IN RE DEUTSCHE BANK 10
patent prosecution, such as staffing projects or coordinat-
ing client meetings, but have no significant role in craft-
ing the content of patent applications or advising clients
on the direction to take their portfolios. There is little
risk that attorneys involved solely in these kinds of prose-
cution activities will inadvertently rely on or be influ-
enced by information they may learn as trial counsel
during the course of litigation. This is because the oppor-
tunity such attorneys have to engage with the client in
any competitive decisionmaking in connection with such
patent prosecution activities is remote. Unless there is a
reasonable expectation that one such attorney’s involve-
ment or authority will change in a relevant way during
the tenure of the prosecution bar, a judge may find that
the attorney is properly exempted from a prosecution bar.
On the other hand, many attorneys involved in litiga-
tion are more substantially engaged with prosecution.
Such involvement may include obtaining disclosure
materials for new inventions and inventions under devel-
opment, investigating prior art relating to those inven-
tions, making strategic decisions on the type and scope of
patent protection that might be available or worth pursu-
ing for such inventions, writing, reviewing, or approving
new applications or continuations-in-part of applications
to cover those inventions, or strategically amending or
surrendering claim scope during prosecution. For these
attorneys, competitive decisionmaking may be a regular
part of their representation, and the opportunity to con-
trol the content of patent applications and the direction
and scope of protection sought in those applications may
be significant. The risk of inadvertent disclosure of
competitive information learned during litigation is
therefore much greater for such attorneys. Such attor-
neys would not likely be properly exempted from a patent
prosecution bar.
11 IN RE DEUTSCHE BANK
Between these examples lies a range of patent prose-
cution activities that may pose a closer question of the
propriety of a patent prosecution bar. For instance, some
junior level attorneys may primarily take instructions
from more senior level attorneys, but may still have
occasion to shape the content of a patent application.
Some senior level supervisors may primarily serve as
liaisons between prosecuting attorneys and clients, but
may also have the opportunity to influence the direction
of prosecution. While these activities may not pose the
heightened risk inherent in principal prosecution activi-
ties, the risk of inadvertent disclosure may nonetheless
arise under the facts and circumstances of a particular
case if counsel is engaged with the client in certain com-
petitive decisionmaking. It is therefore important for a
court, in assessing the propriety of an exemption from a
patent prosecution bar, to examine all relevant facts
surrounding counsel’s actual preparation and prosecution
activities, on a counsel-by-counsel basis.
B
A determination of the risk of inadvertent disclosure
or competitive use does not end the inquiry. Even if a
district court is satisfied that such a risk exists, the
district court must balance this risk against the potential
harm to the opposing party from restrictions imposed on
that party’s right to have the benefit of counsel of its
choice. U.S. Steel, 730 F.2d at 1468; Brown Bag Software
v. Symantec Corp., 960 F.2d 1465, 1470 (9th Cir. 1992).
In balancing these conflicting interests the district court
has broad discretion to decide what degree of protection is
required. Seattle Times Co. v. Rhinehart, 467 U.S. 20, 36
(1984); Brown Bag Software, 960 F.2d at 1470.
In making this determination, the court should con-
sider such things as the extent and duration of counsel’s
past history in representing the client before the PTO, the
degree of the client’s reliance and dependence on that past
IN RE DEUTSCHE BANK 12
history, and the potential difficulty the client might face if
forced to rely on other counsel for the pending litigation or
engage other counsel to represent it before the PTO. See
U.S. Steel, 730 F.2d at 1468 (“Because the present litiga-
tion is extremely complex and at an advanced stage . . .
forcing USS to rely on newly retained counsel would
create an extreme and unnecessary hardship.”). This is
no easy balancing act, however, since the factors that
make an attorney so valuable to a party’s prosecution
interests are often the very factors that subject him to the
risk of inadvertent use or disclosure of proprietary com-
petitive information acquired during litigation.
In evaluating whether to grant a patent prosecution
bar in the first instance, a court must be satisfied that the
kind of information that will trigger the bar is relevant to
the preparation and prosecution of patent applications
before the PTO. For example, financial data and other
sensitive business information, even if deemed confiden-
tial, would not normally be relevant to a patent applica-
tion and thus would not normally be expected to trigger a
patent prosecution bar. On the other hand, information
related to new inventions and technology under develop-
ment, especially those that are not already the subject of
pending patent applications, may pose a heightened risk
of inadvertent disclosure by counsel involved in prosecu-
tion-related competitive decisionmaking as described
above. Also relevant to the threshold inquiry are such
factors as the scope of the activities prohibited by the bar,
the duration of the bar, and the definition of the subject
matter covered by the bar. See MedImmune, 271 F. Supp.
2d at 775 n.14 (refusing to issue a patent prosecution bar
order when, among other things, there had been no show-
ing that patent counsel was currently prosecuting patents
in the same subject matter of the litigation). These fac-
tors should also be taken into account when balancing the
13 IN RE DEUTSCHE BANK
conflicting interests in determining whether a particular
individual may be properly exempt from the bar.
V
We therefore hold that a party seeking imposition of a
patent prosecution bar must show that the information
designated to trigger the bar, the scope of activities pro-
hibited by the bar, the duration of the bar, and the subject
matter covered by the bar reasonably reflect the risk
presented by the disclosure of proprietary competitive
information. We further hold that the party seeking an
exemption from a patent prosecution bar must show on a
counsel-by-counsel basis: (1) that counsel’s representation
of the client in matters before the PTO does not and is not
likely to implicate competitive decisionmaking related to
the subject matter of the litigation so as to give rise to a
risk of inadvertent use of confidential information learned
in litigation, and (2) that the potential injury to the mov-
ing party from restrictions imposed on its choice of litiga-
tion and prosecution counsel outweighs the potential
injury to the opposing party caused by such inadvertent
use.
VI
In this case, the district court refused to adopt a rule
amounting to a per se prohibition on the use of litigation
counsel who also prosecute patents. Opinion at 620-21.
In particular, the magistrate judge properly refused to
rely on the line of district court cases stemming from
Motorola Inc. v. Interdigital Technology Corp., No. 93-CV-
488, 1994 WL 16189689, 1994 U.S. Dist. LEXIS 20714 (D.
Del. Dec. 19, 1994), which found that “‘patent prosecution
is, by its very nature, a form of competitive decision-
making.’” Reconsideration Opinion at 1-3 (quoting Phoe-
nix Solutions, Inc. v. Wells Fargo Bank, N.A., 254 F.R.D.
568, 580 (N.D. Cal. 2008)). The district court, however,
did not appear to have before it a full evidentiary record
IN RE DEUTSCHE BANK 14
of the nature and extent of Macedo’s patent prosecution of
inventions related to the subject matter of the litigation,
to be able to assess whether Macedo’s role in prosecution
for Island constituted competitive decisionmaking under
the standards set forth herein. The court, on remand,
should consider such additional evidence it deems rele-
vant to reassess and reevaluate its determination. In
addition, because the district court’s balancing analysis
was based at least in part on its assessment of the risk of
inadvertent disclosure, the balancing analysis must
likewise be reevaluated following reconsideration of that
risk on remand, in accordance with the standards set
forth herein.
For the foregoing reasons, we grant in part the peti-
tion for writ of mandamus, vacate the discovery order,
and remand the case to the district court for reconsidera-
tion of its order under the standards set forth in this
order.
IT IS ORDERED THAT:
The petition is granted-in-part and the case is re-
manded for further proceedings consistent herewith.
FOR THE COURT
May 27, 2010 /s/ Jan Horbaly
—————————— ——————————
Date Jan Horbaly
Clerk
cc: Counsel Of Record
Clerk, United States District Court for the Southern
District of New York