IP News

In its opinion, the Federal Circuit considered the application of the Supreme Court's opinion in Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004), to requests to modify a protective order. In Intel, the Supreme Court identified specific factors to guide district court “discretion” in allowing direct discovery requests to be used in foreign proceedings under '1782. Id. at 6. The panel reasoned that while the Intel '1782 framework “may not directly govern requests to modify a protective order to make material available in a foreign proceeding,” the same “comity and parity concerns” pertain as in cases of “direct requests for evidentiary material.” Id. at 6, 9. The panel also found that “at least three district courts have acknowledged that '1782 and the Intel factors were relevant” in analogous cases modifying a protective order. Id. at 8. Thus, the Federal Circuit granted POSCO's petition, vacated the district court order allowing modification of the protective order, and directed the district court to address the '1782 factors as articulated in Intel:

1) whether “the person from whom discovery is sought is a participant in the foreign proceeding”; 2) “the nature of the foreign tribunal, the character of the proceedings underway abroad, and the receptivity of the foreign government or the court or agency abroad to U.S. federal-court judicial assistance”; 3) “whether the '1782(a) request conceals an attempt to circumvent foreign proof-gathering restrictions or other policies of a foreign country or the United States”; and 4) whether the request is otherwise “unduly intrusive or burdensome '.”

Id. at 9 (citing Intel, at 264-65).

In his concurrence, Judge Hughes stated that while mandamus was appropriate, he “would not go as far as the majority to hold that the district court must consider the Intel factors.” Slip op., Concurrence at 2. He reasoned that since “[t]he plain language of '1782 and its clear legislative history demonstrate that the statute only applies to new discovery,” '1782 should not apply to cases such as POSCO in which documents have already been produced and thus production need not be compelled. Id. Instead, he would have instructed the district court to look for “good cause” to modify the protective order, and to consider that “deliberately flexible Pansy test” may, but need not necessarily, address the '1782 Intel factors. Id. at 9.

Federal Circuit Applies An 'Abuse of Discretion' Standard of Review for a PTO 'Special Circumstances' Determination

On Aug. 20, 2015, a unanimous Federal Circuit panel of Circuit Judges Moore, Mayer, and Linn issued an opinion, authored by Judge Moore, in Gilbert P. Hyatt v. Michelle K. Lee (Director, PTO), Case no. 2014-1596. The panel affirmed the district court's grant of summary judgment to the PTO under its “special circumstances” exception to the patent application confidentiality requirements of 35 U.S.C. '122(a).

Inventor Hyatt is named on “at least 75 issued patents and nearly 400 pending patent applications.” Slip op. at 2. The applications have “extremely large claim sets” ' an estimated 115,000 claims ' but “only 12 distinct specifications.” Id. at 3. An exemplary application “claims priority from 20 earlier-filed applications, and is itself the parent of 112 continuing applications.” Id . In order to manage the uniquely complex set of Hyatt's applications, in 2013, the PTO began issuing a series of formal office actions called “Requirements,” one directed toward each patent family sharing a common specification, requiring Hyatt to elect a maximum of 600 claims per family. Each Requirement attaches to a particular application, but “contains information about other patent applications in that family” such as the prosecution history, amendments, and the full text of claims of those other applications. Id. at 4.

Ordinarily, such information remains confidential in the course of prosecution until issuance. In Hyatt's situation, however, some issued patents claim priority from a pending application. In those instances, upon issuance, the Requirements become public information, and therefore disclose “otherwise-confidential information about other, non-public applications.” Id. at 5.

Hyatt petitioned the PTO to have confidential information removed from the Requirements pursuant to 35 U.S.C. '122(a), which provides patent application confidentiality unless “necessary to carry out the provisions of an Act of Congress or in such special circumstances as may be determined by the Director.” Id . Director Lee denied the petitions, finding inclusion of confidential information within the Requirements “necessary for proper examination of [Hyatt's] applications under 35 U.S.C. '131″ as well as justified under “special circumstances” due to the complexity of the patent families. Id. at 5'6. Hyatt filed claims in the Eastern District of Virginia under the Administrative Procedure Act, 5 U.S.C. ”702, 706. The district court dismissed “for lack of subject matter jurisdiction under 5 U.S.C. '701(a)(2), holding that there was no 'judicially manageable standard of review' under which it could assess the PTO's decision,” or, alternatively, “that '122 did not prohibit the disclosure of the Requirements, such that the PTO would be entitled to summary judgment.” Id. at 6. Hyatt appealed.

First, the Federal Circuit addressed the reviewability of the PTO's “special circumstances” determination. The panel looked to the statutory language and structure of '122, which provides two exceptions to confidentiality: when explicitly required by Congress, and under “special circumstances.” The panel reasoned that since the first exception is “narrow and affords no agency discretion,” the same scope of exception must apply to the second. Id. at 9. Thus, the “special circumstances” determination was held to be reviewable because the panel found that “Congress intended the exceptions to confidentiality to be narrow and reviewable.” Id.

Second, the Federal Circuit determined the standard of review for a “special circumstances” determination. The panel stated that “[t]he PTO must not only determine that special circumstances exist, but also that the special circumstances justify the specific content to be disclosed,” reviewed for abuse of discretion. Id. at 13. As a general consideration, “[s]ection 122(a) lays out a general prohibition against disclosure; any determination by the Director that special circumstances exist must be made in light of this bar against disclosure.” Id. at 15.

Applying the abuse of discretion standard above, the Federal Circuit found that inclusion of the confidential information in the Requirements “will allow the public to understand the scope of the issued claims.” Id. at 17. Further, “the newly disclosed information is minimal” in light of the large number of claims at issue in Hyatt's 400 applications and their previously disclosed specifications. Id. at 18. Therefore, the panel found that Director Lee did not abuse her discretion in finding “special circumstances” justified to disclose otherwise-confidential information, and affirmed the district court's grant of summary judgment.

Jeff Ginsberg is a Partner in the New York office of Kenyon & Kenyon LLP. Brent T. Hagen is a Law Clerk with the firm.

Federal Circuit: District Courts Must Address Intel Factors In Determining Whether to Modify A Protective Order In Foreign Proceedings

On July 22, 2015, a Federal Circuit panel of Judges Newman, Dyk, and Hughes issued an opinion, authored by Judge Dyk, in In re: POSCO, Case No. 2015-112. The panel granted a petition of mandamus vacating a district court order that had granted a motion to modify a protective order to allow discovery in foreign proceedings. Judge Hughes wrote a separate concurrence.

Patentee Nippon Steel & Sumitomo Metal Corporation (Nippon Steel) originally brought suit against petitioner POSCO in the District of New Jersey for patent infringement and unfair competition. A protective order was entered “prohibiting the cross-use of confidential materials which shall be used by the receiving Party solely for purposes of the prosecution or defense of this action.” Slip op. at 2. Nippon Steel also filed a trade-secret misappropriation suit against POSCO in Japan, and POSCO filed a declaratory judgment action denying the same in Korea. Nippon Steel moved to modify the district court protective order to allow foreign counsel access to confidential documents. A Special Discovery Master issued a Letter Opinion arguing that access to the documents should be granted under “the balancing framework for modifying discovery orders set forth by the Third Circuit in Pansy v. Borough of Stroudsburg, 23 F.3d 772 (3d Cir. 1994).” Id . at 3. The district court affirmed the Special Master's ruling, and POSCO petitioned for mandamus review, which the Federal Circuit took up to address “claims of confidentiality that raise an important issue of first impression.” Id. at 4. Briefing on the role of 28 U.S.C. '1782, a statutory “means for securing documents from another party for use in a foreign proceeding,” was requested. Id.

In its opinion, the Federal Circuit considered the application of the Supreme Court's opinion in Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004), to requests to modify a protective order. In Intel, the Supreme Court identified specific factors to guide district court “discretion” in allowing direct discovery requests to be used in foreign proceedings under '1782. Id. at 6. The panel reasoned that while the Intel '1782 framework “may not directly govern requests to modify a protective order to make material available in a foreign proceeding,” the same “comity and parity concerns” pertain as in cases of “direct requests for evidentiary material.” Id. at 6, 9. The panel also found that “at least three district courts have acknowledged that '1782 and the Intel factors were relevant” in analogous cases modifying a protective order. Id. at 8. Thus, the Federal Circuit granted POSCO's petition, vacated the district court order allowing modification of the protective order, and directed the district court to address the '1782 factors as articulated in Intel:

1) whether “the person from whom discovery is sought is a participant in the foreign proceeding”; 2) “the nature of the foreign tribunal, the character of the proceedings underway abroad, and the receptivity of the foreign government or the court or agency abroad to U.S. federal-court judicial assistance”; 3) “whether the '1782(a) request conceals an attempt to circumvent foreign proof-gathering restrictions or other policies of a foreign country or the United States”; and 4) whether the request is otherwise “unduly intrusive or burdensome '.”

Id. at 9 (citing Intel, at 264-65).

In his concurrence, Judge Hughes stated that while mandamus was appropriate, he “would not go as far as the majority to hold that the district court must consider the Intel factors.” Slip op., Concurrence at 2. He reasoned that since “[t]he plain language of '1782 and its clear legislative history demonstrate that the statute only applies to new discovery,” '1782 should not apply to cases such as POSCO in which documents have already been produced and thus production need not be compelled. Id. Instead, he would have instructed the district court to look for “good cause” to modify the protective order, and to consider that “deliberately flexible Pansy test” may, but need not necessarily, address the '1782 Intel factors. Id. at 9.

Federal Circuit Applies An 'Abuse of Discretion' Standard of Review for a PTO 'Special Circumstances' Determination

On Aug. 20, 2015, a unanimous Federal Circuit panel of Circuit Judges Moore, Mayer, and Linn issued an opinion, authored by Judge Moore, in Gilbert P. Hyatt v. Michelle K. Lee (Director, PTO), Case no. 2014-1596. The panel affirmed the district court's grant of summary judgment to the PTO under its “special circumstances” exception to the patent application confidentiality requirements of 35 U.S.C. '122(a).

Inventor Hyatt is named on “at least 75 issued patents and nearly 400 pending patent applications.” Slip op. at 2. The applications have “extremely large claim sets” ' an estimated 115,000 claims ' but “only 12 distinct specifications.” Id. at 3. An exemplary application “claims priority from 20 earlier-filed applications, and is itself the parent of 112 continuing applications.” Id . In order to manage the uniquely complex set of Hyatt's applications, in 2013, the PTO began issuing a series of formal office actions called “Requirements,” one directed toward each patent family sharing a common specification, requiring Hyatt to elect a maximum of 600 claims per family. Each Requirement attaches to a particular application, but “contains information about other patent applications in that family” such as the prosecution history, amendments, and the full text of claims of those other applications. Id. at 4.

Ordinarily, such information remains confidential in the course of prosecution until issuance. In Hyatt's situation, however, some issued patents claim priority from a pending application. In those instances, upon issuance, the Requirements become public information, and therefore disclose “otherwise-confidential information about other, non-public applications.” Id. at 5.

Hyatt petitioned the PTO to have confidential information removed from the Requirements pursuant to 35 U.S.C. '122(a), which provides patent application confidentiality unless “necessary to carry out the provisions of an Act of Congress or in such special circumstances as may be determined by the Director.” Id . Director Lee denied the petitions, finding inclusion of confidential information within the Requirements “necessary for proper examination of [Hyatt's] applications under 35 U.S.C. '131″ as well as justified under “special circumstances” due to the complexity of the patent families. Id. at 5'6. Hyatt filed claims in the Eastern District of Virginia under the Administrative Procedure Act, 5 U.S.C. ”702, 706. The district court dismissed “for lack of subject matter jurisdiction under 5 U.S.C. '701(a)(2), holding that there was no 'judicially manageable standard of review' under which it could assess the PTO's decision,” or, alternatively, “that '122 did not prohibit the disclosure of the Requirements, such that the PTO would be entitled to summary judgment.” Id. at 6. Hyatt appealed.

First, the Federal Circuit addressed the reviewability of the PTO's “special circumstances” determination. The panel looked to the statutory language and structure of '122, which provides two exceptions to confidentiality: when explicitly required by Congress, and under “special circumstances.” The panel reasoned that since the first exception is “narrow and affords no agency discretion,” the same scope of exception must apply to the second. Id. at 9. Thus, the “special circumstances” determination was held to be reviewable because the panel found that “Congress intended the exceptions to confidentiality to be narrow and reviewable.” Id.

Second, the Federal Circuit determined the standard of review for a “special circumstances” determination. The panel stated that “[t]he PTO must not only determine that special circumstances exist, but also that the special circumstances justify the specific content to be disclosed,” reviewed for abuse of discretion. Id. at 13. As a general consideration, “[s]ection 122(a) lays out a general prohibition against disclosure; any determination by the Director that special circumstances exist must be made in light of this bar against disclosure.” Id. at 15.

Applying the abuse of discretion standard above, the Federal Circuit found that inclusion of the confidential information in the Requirements “will allow the public to understand the scope of the issued claims.” Id. at 17. Further, “the newly disclosed information is minimal” in light of the large number of claims at issue in Hyatt's 400 applications and their previously disclosed specifications. Id. at 18. Therefore, the panel found that Director Lee did not abuse her discretion in finding “special circumstances” justified to disclose otherwise-confidential information, and affirmed the district court's grant of summary judgment.

Jeff Ginsberg is a Partner in the New York office of Kenyon & Kenyon LLP. Brent T. Hagen is a Law Clerk with the firm.