To address some of the practical difficulties that can arise in disclosing highly-valuable information, such as sensitive business information or source code, parties in litigation typically draft and enter comprehensive and detailed protective orders. One particular issue that parties may face is whether the plaintiff’s trial counsel may participate in patent prosecution activities relating to the litigated patent. Although protective orders typically have bars against “any” use outside the context of the litigation, courts have nonetheless supported specific bars against participation in prosecution activities due to the risk of inadvertent disclosure, stating that—“it is very difficult for the human mind to compartmentalize and selectively suppress information once learned, no matter how well-intentioned the effort may be to do so.”1
Courts, however, have sought to balance the protection of sensitive information against plaintiff’s right to choose which counsel it wants to represent their interests before the Patent Office and in litigation. In 2010, the Federal Circuit sought to settle a split in district court authority coming down on either side of these issues in In re Deutsche Bank Trust Co. Americas.2 In that case, the Federal Circuit set forth factors to evaluate whether there is an unacceptable risk of disclosing confidential information on a counsel-by-counsel basis, such as when litigation counsel is also involved in “competitive decisionmaking.”3 With the recent uptick in inter partes review (“IPR”) proceedings, it is important for counsel to understand the scope of the prosecution bar, particularly with the individuals potentially barred—the “competitive decisionmakers.”4 However, even with the new Federal Circuit guidance, district courts have struggled with the prosecution bar and its implicated competitive decisionmakers. As one court concluded, it “sees little value in attempting to draw, in advance, a fuzzy and unmanageable distinction between purely legal matters and matters that implicate competitive decision-making.”5 Using these “fuzzy and unmanageable” distinctions, this article will explore three specific areas of the prosecution bar and competitive decisionmaking activities—the scope of prosecution bars, licensing and settlement participation, and patent prosecution activities—to show how district courts are still wrestling with prosecution bar concepts.
In Deutsche Bank, the Federal Circuit observed that patent prosecution is not a “one dimensional endeavor” and “it is short sighted to conclude that every patent prosecution attorney is necessarily involved in competitive decisionmaking.”6 Due in part by this observation, the Federal Circuit charged district courts to evaluate whether there is an unacceptable risk of disclosing confidential information on a counsel-by-counsel basis, such as when litigation counsel is also involved in competitive decisionmaking.7
The Federal Circuit identified several situations that may qualify as competitive decisionmaking, including:
obtaining disclosure materials for new inventions and inventions under development, investigating prior art relating to those inventions, making strategic decisions on the type and scope of patent protection that might be available or worth pursuing 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.8
Not all involvement in patent prosecution, however, qualifies as competitive decisionmaking under the Deutsche Bank standard. The Federal Circuit distinguished administrative and oversight duties from activities in which counsel plays a “significant role in crafting the content of patent applications or advising clients on the direction to take their portfolios.”9 According to the Federal Circuit, “tasks that are more substantially engaged with prosecution” pose a greater risk of inadvertent disclosure.10 Because of the fact-specific nature of this inquiry, the Federal Circuit put forth a counsel-by-counsel balancing test to compare the risk of inadvertent disclosure or competitive use against the potential harm in denying the opposing party its counsel of choice.11
Despite adding some much-needed clarity on the prosecution bar and competitive decisionmaking, future district court litigation will need to smooth out its’ rough edges. First, absent explicit language in the protective order restricting involvement in IPR proceedings, district courts are split on whether a protective order specifically barring patent prosecution also includes barring IPR proceedings.12 A Southern District of New York judge found that the prosecution bar alone does not bar litigation counsel from participating in a related IPR proceeding.13 The Court relied on a Patent Trial and Appeal Board decision that held that: “an inter parties review proceeding is ‘neither a patent examination nor a patent reexamination. Rather, it is a trial, adjudicatory in nature and constitutes litigation.’”14 A Northern District of California judge, however, established that a prosecution bar that did not expressly include IPR proceedings still extended to bar counsel from related IPR proceedings.15 Focusing on the potential to modify the scope or maintenance of patent claims in an IPR proceeding, the Court determined that counsel could cede claim scope using confidential information learned in litigation.16
Complicating prosecution bars even further, courts are not settled on whether licensing and settlement negotiation is a form of competitive decisionmaking activity. On one hand, a court determined that an in-house attorney involved in licensing was a competitive decisionmaker.17 According to the court, the licensing negotiations placed the attorney in an “untenable position of having either to refuse to offer crucial legal advice at times or risk disclosing protected information.”18 On the other hand, a court deemed an in-house counsel strictly involved in litigation and settlement negotiations as not a competitive decisionmaker.19 The court focused on the counsel’s sufficient isolation from the company’s prosecution activity.20 And, in the middle, are some courts that determine whether licensing activities constitute competitive decisionmaking on a case-by-case basis.21 Here, “[t]he facts, not the category must inform the result.”22
Even the type of patent prosecution work that constitutes competitive decisionmaking is in flux. Even when an individual is not involved in prosecution activity, a court may still determine that the individual sufficiently engaged in competitive decisionmaking. In Trading Technologies, the plaintiff’s in-house counsel was involved in competitive decisionmaking even though his work did not involve “current inventive activity or direct involvement in patent prosecution activity.”23 Instead, the in-house counsel engaged in competitive decisionmaking by providing oversight to the patent prosecution department, being one of the most senior executives of the company, and architecting the company’s patent enforcement strategy.24 Yet, in Smartsignal, an individual was not a competitive decisionmaker even when the individual was the company’s Chief Technology Officer and a named inventor on several of plaintiff’s patents and patent applications.25 Focusing on the word “competitive” in competitive decisionmaker, the Court determined that the company employing the individual in dispute was not a competitor to the opposing party.26
The concurrence of IPR proceedings alongside district court litigation is becoming ever more commonplace due to IPR’s increasing popularity. Correspondingly, issues with the prosecution bar and the “competitive decisionmaker” will continue to come to the forefront. Until the courts resolve these “fuzzy and unmanageable” distinctions, there remain important, lingering issues regarding the prosecution bar even after the Federal Circuit’s attempt to clarify the prosecution bar in itsDeutsche Bank decision.