Parties in the discovery phase of litigation often exchange confidential documents and information, which may contain proprietary information such as the technical aspects and know-how behind a party’s intellectual property. To facilitate the exchange of confidential information and prevent its misuse by parties to the litigation, courts often use an agreed protective order, which outlines the disclosure and dissemination of confidential information, proper use of such information (e.g., prosecuting or defending the instant action) and the return of confidential information following the conclusion of litigation and any appeals taken.

One term in an agreed protective order―especially in patent litigation, which may involve competitors exchanging confidential, proprietary technical information―is a patent prosecution bar. This prevents individuals that view confidential information from participating in prosecuting patent applications in the technology areas designated in the protective order. Misuse or mishandling of confidential information exchanged in discovery may give an unfair advantage in patent prosecution, should outside counsel handle both litigation and patent prosecution for a party. It is not uncommon for a law firm to represent an entity in both a patent dispute and prosecution of patent applications before the USPTO. Although a firm may internally separate and delineate its patent practice into litigation and prosecution subpractices, litigation and prosecution practices are often complementary and each team bolsters and supports the other team. For example, patent prosecutors may support litigation teams regarding the scientific and technical aspects of the technology in preparation for claim construction.

However, a protective order in view of ongoing litigation may have the effect of limiting such support and cross talk between litigation and prosecution teams, as demonstrated in a recent case, Global Tubing, LLC v. Tenaris Coiled Tubes, LLC, No. 4:17-CV-3299, 2022 WL 3349316, at *1 (S.D. Tex. Aug. 14, 2022). This case provides an example of the pitfalls that prosecution and litigation teams may encounter with respect to daily practice on both the patent litigation and patent prosecution front in view of a patent prosecution bar.

Tenaris owns the patents in dispute: U.S. Patent No. 9,803,256 (’256 patent), the parent application, and two child patents, U.S. Patent Nos. 10,378,074 (’074 patent) and 10,378,075 (’075 patent). The disputed patents are directed to coiled tubing used in the oil and gas industry. As competitors and among the few manufacturers of such coiled tubing, Global Tubing sought, inter alia, a declaratory judgement that Tenaris engaged in inequitable conduct in obtaining the ’256 patent and noninfringement of the ’256 patent. Tenaris counterclaimed for infringement of the ’256, ’074 and ’075 patents.

To facilitate the exchange of confidential information between the parties in the litigation, the court entered an agreed protective order including a patent prosecution bar, which states:

[A]ny attorney for or representing a party, whether in-house or outside counsel, and any person associated with the party and permitted to receive Confidential or Attorneys' Eyes Only information pursuant to this Protective Order, who reviews or otherwise learns, in whole or in party, information designated by a party not represented by the attorney as Attorneys' Eyes Only information under this Order and disclosing detailed technical information directed, in whole or in part, to 1) the metallurgical composition of coiled steel tubing, 2) the microstructure of coiled steel tubing, and/or 3) a method of heat treatment of coiled steel tubing (“AEO Technical Information”), shall not prepare, prosecute, supervise, or assist in the preparation or prosecution of any patent application pertaining to coiled steel tubing or methods of heat treating coiled steel tubing) during the pending of this case and for two years after the conclusion of this litigation, including any appeals.

Id. at *2 (emphasis added). The agreed protective order is enforced under Federal Rule of Civil Procedure 37(a) and violation of the protective order may lead to sanctions or the court holding the violating party in contempt.

Global Tubing sought a motion for Rule 37 sanctions, alleging that Tenaris’ litigation counsel, permitted to receive confidential information under the protective order, assisted in the prosecution of the ’074 and ’075 patents, thus violating the patent prosecution bar.

The Prosecution Bar in the Agreed Protective Order Was Broad

Courts recognize that a party’s most rigorous efforts in preserving confidentiality of information received in an ongoing litigation may not be enough to prevent inadvertent disclosure, and a patent prosecution bar is necessary to avoid having to compartmentalize and suppress information inadvertently learned. In re Deutsche Bank Trust Co., 605 F.3d 1373, 1378 (Fed. Cir. 2010) (“[E]ven the most rigorous efforts of the recipient of such information to preserve confidentiality in compliance with the provisions of such a protective order may not prevent inadvertent compromise.”); id. (“[I]t 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.”) (quoting Fed. Trade Comm’n v. Exxon Corp., 636 F.2d 1336, 1350 (D.C. Cir. 1980)). A patent prosecution bar would effectively wall off litigation counsel from prosecution counsel.

Courts analyze the terms of the protective order to determine whether a party’s conduct violates the order. Avago Techs., Inc. v. IPtronics Inc., No. 5:10-cv-02863-EJD, 2015 WL 3640626, at *3 (N.D. Cal. June 11, 2015) (“[T]o determine if conduct violates a protective order, courts focus on the terms of the order itself.”). The instant prosecution bar prevents litigation counsel from “prepar[ing], prosecut[ing], supervis[ing], or assist[ing] in the preparation or prosecution of any patent application pertaining to coiled steel tubing or methods of heat treating coiled steel tubing… .” See Glob. Tubing, 2022 WL 3349316, at *3. While Tenaris argued that the activities of claim drafting and amending are prosecution activities in which the misuse of information is most likely to occur, the court broadly construed the terms of the patent prosecution bar, indicating that the bar did not define “patent prosecution” and did not specifically enumerate the patent prosecution activities to which the bar extends, such as specifically enumerating and prohibiting litigation counsel to assist in claim drafting and amending. The court took the position that any activity advancing a patent application before the USPTO qualifies as patent prosecution. See id. (citing Encap, LLC v. Scotts Co., No. 11-C-685, 2014 WL 6386965, at *3 (E.D. Wis. Nov. 14, 2014) (finding an examiner interview to gather evidence for reconsideration motion to fall under patent prosecution).

Tenaris’ Litigation Counsel Impermissibly Assisted in Patent Prosecution

At issue is a notebook from Southwestern Pipe Inc.―which subsequently exited the coiled tubing market―distributed as a sales brochure regarding the CYMAX tubing system. See id. at *2 (referring to CYMAX broadly as prior art); see also Glob. Tubing, LLC v. Tenaris Coiled Tubes, LLC, No. 4:17-CV-3299, 2021 WL 1169322, at *2 (S.D. Tex. Mar. 26, 2021) (describing CYMAX as a notebook and used as a sales brochure and its contents). CYMAX contains proprietary chemical specifications regarding coiled tubing. See Glob. Tubing, 2021 WL 1169322, at *2 (describing the carbon content of CYMAX100 coiled tubing). Global Tubing asserted that Tenaris’ litigation counsel assisted in coordinating the disclosure of CYMAX to the USPTO in the prosecution of the ’074 and ’075 patents, ultimately obtaining stronger claims.

The court focused its analysis on internal strategy discussions between litigation and prosecution counsel, in which prosecution counsel determined that it must disclose CYMAX in an Information Disclosure Statement (IDS) in the prosecution of the patent applications that would lead to the granting of the ’074 and ’075 patents. In particular, the court homed in on litigation counsel’s agreement that information directed to the proprietary chemical specifications of CYMAX would have been confidential and not disclosed publicly, as well as an agreement that this information could be excluded from the IDS. While the court determined that litigation counsel did not assist in the preparation or editing of the IDS, it determined that discussion with prosecution counsel about what part of CYMAX to disclose in the IDS and the agreement on the disclosure strategy amounted to “assisting” in patent prosecution. The discussion of CYMAX with patent prosecution counsel regarding proprietary sections that should be excluded and agreement with prosecution counsel regarding the specific parts of CYMAX to disclose amounted to assisting in IDS submission and, thus, assisting in patent prosecution, which was barred under the broad patent prosecution bar. Based on this interaction with prosecution counsel, the court determined that Tenaris violated the prosecution bar in the agreed protective order and Global Tubing is entitled to sanctions under Rule 37(a).

Conclusion and Analysis

Global Tubing, in finding violation of a patent prosecution bar via an agreement to advancing an IDS strategy, presents an example of a court broadly construing a patent prosecution bar and the possible ramifications of broad interpretation of the terms. The court in Global Tubing found internal strategy discussions between litigation and prosecution counsel regarding the disclosure of CYMAX in an IDS to be in violation of the bar. This holding is surprising because many agreements exclude this particular type of exchange from the patent prosecution bar.

In reaching its holding, the court distinguished the instant patent prosecution bar from that described in Encap, which reads:

No person who receives or reviews information designated Confidential—Subject to Patent Prosecution Bar Information by a Producing Party may be involved in the prosecution of any patent or patent application pertaining to: … (ii) the subject matter of the patents-in-suit; or (iii) the subject matter of any applications or patents claiming priority, in whole or in part, to any of the patents-in-suit. Preparation and/or prosecution activities contemplated herein include obtaining disclosure materials for new inventions and inventions under 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 the applications to cover those inventions, or strategically amending or surrendering claim scope during prosecution… . To avoid confusion, the activities prohibited by this paragraph apply to original examination, continued examination, reexamination, inter partes review, and/or post-grant review of patent claims involving the relevant subject matter.

Encap, 2014 WL 6386965, at *1 (emphasis added). The court took notice that the patent prosecution bar of Encap specifically enumerates activities that fall under its patent prosecution bar as compared to the prohibited activities of “prepar[ing], prosecut[ing], supervis[ing], or assist[ing]” of the bar of the instant case. Glob. Tubing, 2022 WL 3349316, at *3 (“[A]lthough Defendants argue that drafting and amending claims during prosecution is where the risk of misuse of detailed technical information is most likely to occur, … the prosecution bar does not include a definition of patent prosecution or a list of prohibited activities that limits the scope of the prosecution bar to drafting and amending patent claims.”) (internal citation omitted).

The court also noted and took issue with factual discrepancies in the instant matter over the representation of CYMAX in a prior opposition to sanctions under the crime fraud doctrine―in particular, Tenaris’ allegation of CYMAX’s cumulative nature of another reference disclosed to the USPTO regarding the excluded carbon content chemistries and discrepancies regarding the alleged confidential status of CYMAX versus the use of CYMAX as a sales brochure. See id. at *5 n.4. The court found these discrepancies in Tenaris’ representation of CYMAX troublesome. See id.

Patent prosecution counsel, in prosecuting patent applications before the USPTO, have a duty to disclose information that is material to the patentability of the instant application. See 37 CFR § 1.56. A blanket prohibition of litigation counsel from “assist[ing]” in patent prosecution, as held in Global Tubing, would only serve to hamper and interfere with prosecution counsel’s Rule 56 duty of disclosure in the prosecution of patent applications before the USPTO. Although the USPTO has procedures for the submission and disclosure of confidential information or information subject to a court’s protective order, Tenaris’ prosecution counsel did not appear to consider such measures when disclosing CYMAX to the USPTO. See MPEP § 724.

While patent litigation between fierce market competitors is inevitable and parties are likely to exchange confidential, proprietary information for the purposes of the litigation, the presence of litigation and a protective order containing a patent prosecution bar should not hamper a party’s ability to continue to develop and evolve its patent portfolio, especially if the same law firm represents a party in both the present patent dispute and the prosecution of patent applications before the USPTO. As competitors, both sides are likely to be involved in patent procurement to bolster their portfolios but also subject to the agreed protective order and patent prosecution bar of the instant litigation. To avoid the result of Global Tubing, rather than agreeing to a generic protective order and patent prosecution bar in contemplation of litigation that prohibits counsel from, inter alia, “assist[ing]” in patent prosecution, parties should seek to further define what constitutes “patent prosecution” according to the proposed patent prosecution bar and to carve out specific exceptions that would not be considered “assist[ing]” in patent prosecution―which may include, for example, supplying a reference to prosecution counsel, working with prosecution counsel as to whether a reference is public information, or working with prosecution counsel on how to disclose information to the USPTO, all of which support prosecution counsel’s duty to satisfy Rule 56. To prohibit such activity under a patent prosecution bar would be counterintuitive, put patent prosecution counsel in an ethical conundrum and open the door for competitors to challenge the validity of a granted patent by alleging inequitable conduct for the failure to disclose material information regarding patentability. It could further challenge a patent practitioner’s license to practice law and to practice prosecution matters before the USPTO for perpetuating fraud on the USPTO during prosecution. In a best-case scenario, a patent prosecution bar will specifically have a list of excluded activities as in Encap.