For the first time in a published decision, the Federal Circuit has addressed when and under what circumstances an attorney who receives confidential information through discovery can be barred from prosecuting patent applications related to the subject matter of the litigation. In doing so, the Federal Circuit resolved a split among district courts as to whether patent prosecution inherently involves “competitive decisionmaking.” The court held that the determination must be made on a counsel-by-counsel basis, and that the potential harm to the party requesting the patent prosecution bar must be balanced against the potential harm to the opposing party from being deprived of counsel of its choice. In re Deutsche Bank Trust Co. Americas, Misc. Dkt. 920 (Fed. Cir. May 27, 2010).  


Island Intellectual Property LLC (“Island”) asserted three patents related to financial deposit-sweep services against the Deutsche Bank Trust Company (“Deutsche”). All three of the patents resulted from continuation-in-part applications filed from a common parent application. Island also had nineteen pending applications related to this family of patents through continuations and continuations-in-part, several of which were unpublished.

Deutsche sought a protective order including a patent prosecution bar preventing anyone who gained access to documents marked “confidential - patent prosecution bar” from involvement in prosecuting any patent in the area of deposit sweep services during and for a limited period after the conclusion of the litigation. The magistrate judge granted the order as to all but one of Island’s trial counsel: Island’s lead litigation counsel, Charles Macedo.

Deutsche unsuccessfully sought reconsideration of the district court’s order, then petitioned for a writ of mandamus directing the district court to vacate the order exempting Macedo from the patent prosecution bar. After deciding that Federal Circuit law, rather than regional circuit law, should govern the issue, the court addressed the legal standard for imposing a patent prosecution bar on attorneys who receive confidential discovery materials in litigation. Judge Linn authored the court’s opinion.

Counsel’s Involvement in “Competitive Decisionmaking” is Key Factor

Whether an attorney should be barred from receiving confidential discovery materials is a fact-intensive issue that must be decided on an attorney-by-attorney basis. The determination turns on the extent to which the attorney is involved in “competitive decisionmaking” with his or her client. In an earlier case involving attorney access to confidential information but not a patent prosecution bar, U.S. Steel Corp. v. United States, 730 F.2d 1465 (Fed. Cir. 1984), the court defined “competitive decisionmaking” as:

[S]horthand for a counsel’s activities, association and relation 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 design, etc.) made in light of similar or corresponding information about a competitor.

The court clarified that although U.S. Steel singled out “pricing” and “product design” as activities that might implicate “competitive decisionmaking,” those were only examples of the types of activity that might fall within the scope of that term.

The Federal Circuit had never addressed in a precedential opinion the circumstances under which an attorney’s activities in prosecuting patents on behalf of a client constitute competitive decisionmaking. Accordingly, it looked to district court case law on this issue. The Federal Circuit noted that district courts were split over the question of whether patent attorneys were involved in competitive decisionmaking, with some courts holding that patent prosecution inherently involves competitive decisionmaking, and others holding that patent prosecution by itself does not raise a presumption of unacceptable risk of inadvertent disclosure.

The Federal Circuit explained that attorneys engage in a variety of patent prosecution activities, and therefore that the propriety of a patent prosecution bar must be determined on a counsel-bycounsel basis. For example, the court described some activities that clearly do not constitute competitive decisionmaking:

[S]ome attorneys involved in patent litigation . . . 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 highaltitude oversight of patent prosecution, such as staffing projects or coordinating client meetings, but have no significant role in crafting the content of patent applications or advising clients on the direction to take their portfolios.

On the opposite end of the spectrum are activities that have the potential to go to the heart of competitive decisionmaking:

Such involvement may include 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.

The court acknowledged that between these examples “lies a range of activities that may pose a closer question of the propriety of a patent prosecution bar.” The court therefore reiterated that determining whether a patent attorney is involved in competitive decisionmaking requires an examination of all relevant facts surrounding his or her actual preparation and prosecution activities, on an attorney-by-attorney basis.

Competitive Decisionmaking Not The End Of The Inquiry: Balancing Required

Even if a court is satisfied that the risk of inadvertent disclosure exists by reason of the attorney’s involvement in competitive decisionmaking, the court must balance this risk against the potential harm to the opposing party from being deprived of the counsel of its choice. In making this determination, the court should consider 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 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.  

Moreover, in evaluating whether to grant a patent prosecution bar, 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:

For example, financial data and other sensitive business information . . . would not normally be expected to trigger a patent prosecution bar. On the other hand, information related to new inventions and technology under development, especially those that are not already the subject of pending patent applications, may pose a heightened risk of inadvertent disclosure by counsel involved in prosecution-related competitive decisionmaking . . . . Also relevant . . . 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.

The Federal Circuit summarized these considerations in an express holding of what a party seeking a patent prosecution bar must show:

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 prohibited 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.

The record in this case did not contain sufficient information to enable the court to evaluate the requested patent prosecution bar against lead counsel Macedo under these standards. Accordingly, the Federal Circuit remanded the case with instructions for the district court to develop an evidentiary record of the nature and extent of Macedo’s prosecution activities related to the subject matter of the litigation in order to determine whether those activities involve competitive decisionmaking, and to reevaluate its balancing analysis under the standards set forth in this opinion.