Multi-defendants complexity , Protective order , source code ? settlement
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Message: Multi-defendants complexity , Protective order , source code ? settlement
Moreover, while a protective order is enforceable against all parties, attorneys at least are obligated under the ethical obligations of the bar to comply with the terms of the protective order to ensure that information designated thereunder is not used improperly. For example, under the terms of many common protective orders, if one co-defendant produced technical information designated as confidential under the protective order, that information could not be shared with
an in-house attorney for a competing co-defendant. Some defendants may want their own in-house attorneys to view that information for a number of reasons: to evaluate the strengths and weaknesses of a party’s case, to evaluate the strengths and weaknesses of a co-defendant’s case, and to provide better assistance to outside counsel in developing strategies and defenses. Indeed, in-house counsel often seeks access to some level of confidential information in a case in an effort to monitor all ongoing activity in a litigation, instead of relying exclusively on outside counsel to provide that information. While such a request is understandable for companies with extensive in-house legal departments, it does create an added level of complexity.
an in-house attorney for a competing co-defendant. Some defendants may want their own in-house attorneys to view that information for a number of reasons: to evaluate the strengths and weaknesses of a party’s case, to evaluate the strengths and weaknesses of a co-defendant’s case, and to provide better assistance to outside counsel in developing strategies and defenses. Indeed, in-house counsel often seeks access to some level of confidential information in a case in an effort to monitor all ongoing activity in a litigation, instead of relying exclusively on outside counsel to provide that information. While such a request is understandable for companies with extensive in-house legal departments, it does create an added level of complexity.
Source Code Escrow
Another issue that often arises in the context of multiple defendant patent litigation is whether to utilize the services of an escrow agent for certain types of confidential information. One common type of information subject to escrow is source code, although escrow services also could be used for many other types of highly confidential and trade secret information. The use of escrow agents comes into play when, while recognizing the need to provide discovery to the plaintiff, a defendants also recognizes that some of the information that may be relevant to the plaintiff may be the defendant company’s most prized intellectual property and trade secret information.
Many companies treat their source code as the so-called company “crown jewels.” This type of information may be of such value that, if it were even inadvertently placed in the wrong hands, it could cause significant financial damage to the producing party.
Confidential Information produced in a litigation even under the terms of a protective order might be accessible by any number of lawyers working at a receiving law firm, as well as paralegals, professional assistants, copy vendors, trial strategy vendors, experts and/or their assistants, the court, and many other personnel. Having that many people access source code can cause many companies great angst. And, with multiple defendants, the number of individuals with access is multiplied by the number of parties. This potential list of people can be too many for some companies to bear. Accordingly, many such companies may choose to fight disclosure of the trade secret information at all.
In a situation in which the source code or other highly confidential trade secret information relates to the accused product in a patent infringement case, courts almost invariably are going to require production of that information but may impose restrictions on how it can be used. Anticipating such a likelihood, many defendants in a multiple defendant patent infringement lawsuit want to create provisions that make misuse of this trade secret information as least likely as possible. Indeed, they An escrow arrangement essentially operates as follows: An escrow agent is provided with the rules under which parties to the lawsuit can access highly confidential information. The producing party then deposits the highly confidential information with the escrow agent. Then, approved personnel can visit an escrow facility, and, under the watchful eye of an escrow agent, examine the confidential information in an environment in which copies may not be made and/or other restrictions are in place to preclude the information from leaving that escrow agent’s facility without approval from the owner of the highly confidential information. Oftentimes, the escrow agent is required to maintain a log of personnel who visit and review the information, and must validate by identification a list of preapproved visitors to the escrow facility.
Such a provision has become more common in multiple defendant lawsuits to prevent competitor co-defendants from having in-house technical people view the most prized information of a competitor. The protective order often contains provisions requiring the identification of outside counsel who will have access to the escrowed material and provides an opportunity for objection to those individuals before they obtain access. In this way, competing co-defendants can best monitor exactly who has access to their highly prized trade secret information. It further provides them with the security of providing access to such confidential information only in an environment that is less likely to involve inadvertent disclosure to a competitor’s technical personnel.
Again, such escrow provisions could be used for information other than source code, and are often used in litigations involving one plaintiff and one defendant. However, this issue appears to arise more frequently when source code production is required in multiple defendant litigations involving competitors. The possibility that one of many defendants might seek a source code escrow again increases the complexity of preparing a protective order.
In sum, it can be extremely complicated to negotiate a protective order in litigations involving multiple defendants who are competitors because each defendant may bring to the table one or more issues that they want to see in the protective order, each of which will have to be negotiated not only among the defendants, but with the plaintiff. The possibility that negotiations over a protective order can drag on for many months increases the cost to all the parties, including the defendants.
Another issue that often arises in the context of multiple defendant patent litigation is whether to utilize the services of an escrow agent for certain types of confidential information. One common type of information subject to escrow is source code, although escrow services also could be used for many other types of highly confidential and trade secret information. The use of escrow agents comes into play when, while recognizing the need to provide discovery to the plaintiff, a defendants also recognizes that some of the information that may be relevant to the plaintiff may be the defendant company’s most prized intellectual property and trade secret information.
Many companies treat their source code as the so-called company “crown jewels.” This type of information may be of such value that, if it were even inadvertently placed in the wrong hands, it could cause significant financial damage to the producing party.
Confidential Information produced in a litigation even under the terms of a protective order might be accessible by any number of lawyers working at a receiving law firm, as well as paralegals, professional assistants, copy vendors, trial strategy vendors, experts and/or their assistants, the court, and many other personnel. Having that many people access source code can cause many companies great angst. And, with multiple defendants, the number of individuals with access is multiplied by the number of parties. This potential list of people can be too many for some companies to bear. Accordingly, many such companies may choose to fight disclosure of the trade secret information at all.
In a situation in which the source code or other highly confidential trade secret information relates to the accused product in a patent infringement case, courts almost invariably are going to require production of that information but may impose restrictions on how it can be used. Anticipating such a likelihood, many defendants in a multiple defendant patent infringement lawsuit want to create provisions that make misuse of this trade secret information as least likely as possible. Indeed, they An escrow arrangement essentially operates as follows: An escrow agent is provided with the rules under which parties to the lawsuit can access highly confidential information. The producing party then deposits the highly confidential information with the escrow agent. Then, approved personnel can visit an escrow facility, and, under the watchful eye of an escrow agent, examine the confidential information in an environment in which copies may not be made and/or other restrictions are in place to preclude the information from leaving that escrow agent’s facility without approval from the owner of the highly confidential information. Oftentimes, the escrow agent is required to maintain a log of personnel who visit and review the information, and must validate by identification a list of preapproved visitors to the escrow facility.
Such a provision has become more common in multiple defendant lawsuits to prevent competitor co-defendants from having in-house technical people view the most prized information of a competitor. The protective order often contains provisions requiring the identification of outside counsel who will have access to the escrowed material and provides an opportunity for objection to those individuals before they obtain access. In this way, competing co-defendants can best monitor exactly who has access to their highly prized trade secret information. It further provides them with the security of providing access to such confidential information only in an environment that is less likely to involve inadvertent disclosure to a competitor’s technical personnel.
Again, such escrow provisions could be used for information other than source code, and are often used in litigations involving one plaintiff and one defendant. However, this issue appears to arise more frequently when source code production is required in multiple defendant litigations involving competitors. The possibility that one of many defendants might seek a source code escrow again increases the complexity of preparing a protective order.
In sum, it can be extremely complicated to negotiate a protective order in litigations involving multiple defendants who are competitors because each defendant may bring to the table one or more issues that they want to see in the protective order, each of which will have to be negotiated not only among the defendants, but with the plaintiff. The possibility that negotiations over a protective order can drag on for many months increases the cost to all the parties, including the defendants.
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