Considering whether a foreign plaintiff could force a U.S. based-defendant to produce documents for use in a trade secret case, the U.S. Court of Appeals for the Seventh held that plaintiff could employ American law to require the production of documents, although the case was pending in Germany. Applications of Heraeus Kulzer v. Biomet, Case Nos. 09-2858, 10-2639 (7th Cir., Jan. 24, 2011) (Posner, J.)
Heraeus Kulzer GmbH, a manufacturer of bone cement for use in orthopedic surgery, sued Biomet Inc. in a German court for trade secret theft. In the 1970s Heraeus entered into a distribution agreement with Merck. In order for Merck to obtain the necessary regulatory approvals for its product, Heraeus provided Merck with confidential information. Subsequently, Merck entered into a joint venture with Biomet, another bone cement manufacturer. Heraeus alleged that Merck revealed its trade secrets to Biomet and that Biomet’s new product incorporates Heraeus trade secrets.
The German legal system does not permit discovery to the same extent the U.S. system does. A U.S. litigant may request and obtain an entire category of documents from the opposing party. A litigant in Germany, however, may only obtain documents that he is able to identify specifically, i.e., the contract between Merck and Biomet but not correspondence relating to that same contract. In efforts to obtain a broad range of documents from Biomet, Heraeus applied to the U.S. district court where Biomet is based pursuant to 28 U.S.C. § 1782. Under the statute, a U.S. district court may order a person who resides or who can be found in the district to give testimony or to produce documents for us in a proceeding in a foreign tribunal. Biomet argued that it would be abusive to let Heraeus obtain discovery under the U.S. rules.
The 7th Circuit rejected the court’s decision that discovery would be abusive and found that Heraeus was entitled to discovery as long as it was not abusing the statute. The court did not see any abuses by Heraeus. First, Heraeus could not have obtained the discovery it needed in the German suit under that court’s rules, and there was no indication that the German court would refuse to admit evidence that Heraeus obtained through U.S. discovery. Second, there was no indication that the German court was concerned about Heraeus submitting excessive discovery. Finally, no evidence suggested that the German court believed that Heraeus’s discovery requests would impose an undue burden on Biomet. The court said that if any of the abuses would have been real threats, Biomet could have asked the German court to limit or bar Heraeus’s efforts to take discovery in the United States or to condition Heraeus’s right to take discovery on giving Biomet reciprocal rights. Biomet did not ask the German court for such relief. In addition, Biomet had refused to meet with Heraeus to discuss limiting the scope of its discovery requests, and the firm had presented no evidence of the burdens that granting Heraeus’s request would impose. Therefore, the 7th Circuit determined that Biomet’s objections to Heraeus’s discovery demands were not genuine.
When remanding the case to the district court for consideration of Biomet’s objections to the scope and burdensomeness of Heraeus’s requests, the court explained that “Heraeus’s discovery demands are broad, in part because they reach back fifteen years, to before the joint venture between Biomet and Merck. For all we know, they are too broad. But if so, it doesn’t follow that Heraeus is not entitled to any discovery.”