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District Court Reinforces High Bar For Applying Patent Prosecution Bar
11/19/2024In Champion Power Equipment Inc. v. Firman Power Equipment Inc., No. CV-23-02371-PHX-DWL (D. Ariz. Oct. 18, 2024), defendant filed a motion for a protective order seeking two forms of relief:
- a patent prosecution bar that would preclude certain attorneys representing plaintiff from performing patent prosecution work for a period of two years following the conclusion of the action; and
- an order allowing each side the opportunity to object before its confidential information was shared with the other party’s non-technical experts.
The United States District Court for the District of Arizona denied the former and granted the latter. Id. at 2.
Patent Prosecution Bar
The Court evaluated the need for imposing a patent prosecution bar under the framework set forth In re Deutsche Bank Trust Co., 605 F.3d 1373 (Fed. Cir. 2010). Deutsche Bank set forth two key considerations: (i) whether the attorney bound by the requested bar participates in competitive decision-making, and (ii) if so, balancing the party’s right to have the benefit of counsel of its choice with the risk of the potential harm that may be caused. See Champion Power, No. CV-23-02371-PHX-DWL, at 2–3.
The first inquiry in Deutsche Bank focused on whether the attorneys that would be bound by the prosecution bar are involved in “competitive decision-making,” which includes participation in activities, such as, for example, pricing and product design. Id. at 2. The Champion Power court explained that “one way an attorney can be involved in competitive decision making is when trial counsel in a patent infringement case also represents the same client in prosecuting patent applications before the PTO,” but for such activity to reach the level of “competitive decision making,” the attorney’s involvement must amount to more than reporting office actions, filing paperwork, or having high-level oversight of patent prosecution. Id. at 2–3 (internal citations omitted). Instead, the attorney’s role must regularly 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.” Id. at 3 (internal citations omitted).
The Court then focused on the second inquiry in Deutsche Bank, explaining that, “[e]ven if a district court is satisfied that such a risk exists, the district court must balance this risk against the potential harm to the opposing party from restrictions imposed on that party’s right to have the benefit of counsel of its choice.” Id. at 3 (internal citations omitted). This analysis may take into account factors such as the scope and duration of the representation, the degree of reliance of the client on the attorney, and the potential hardship the client may face if new counsel were required. Id. at 3–4. Furthermore, the Court explained that an attorney’s access to confidential or sensitive business information may still not trigger the need for a patent prosecution bar because the information may be irrelevant to the drafting of a patent application. Id. at 4. Access to information related to new inventions or technology under development, however, may be sufficient due to a “heightened risk of inadvertent disclosure by counsel involved in prosecution-related competitive decision making.” Id. (internal citations omitted).
Ultimately, the Champion Power court found that two of the attorneys in question did not qualify as competitive decision-makers while the other two did. Id. at 7. For the former two attorneys, the Court explained that “there is no evidence that [either] [has] ever prosecuted patents for Plaintiff. Nor is there any evidence that they intend to start doing so in the future.” Id. at 9. Thus, they could not be considered competitive decision-makers. Id. For the latter two attorneys, the Court looked at their patent prosecution responsibilities, strategic decision-making, and duration of representation as outside counsel and found them to have met the threshold of being competitive decision-makers. Id. at 6–8. Despite this, however, the court found that they should not be subject to a prosecution bar. Id. at 12. This decision was influenced by the type of information to be exchanged during discovery, which did not relate to new inventions or technology under development, and the significant prejudice plaintiff would suffer if forced to rely on other counsel. Id. at 12–13.
Opportunity To Object Before Disclosure Of Confidential Information To Experts
Both parties agreed that each side should have the right to object before information that is designated as “Confidential” is disclosed to technical experts retained by the opposing party. Id. at 14. However, the parties disagreed as to whether this right should also apply to non-technical experts. Id. The Court agreed with defendant that this right of objection should apply to all experts, including non-technical ones. Id. at 15. The Court explained that the right of objection is “meant to protect against the possibility that a particular expert will misuse confidential information,” and because “[t]hat risk is not limited to technical experts,” there is no reason to limit the right of objection to only technical experts. Id.
