Tuesday, October 05, 2021

Precedential No. 25: TTAB Rejects Proposed Modification of Standard Protective Order, Refuses to Apply EU Privacy Regulation

In a precedential order, the Board denied a motion to modify the Standard Protective Order (SPO) to permit in-house counsel to view documents designated as "Confidential - Attorney's Eye's Only" (trade secret and commercially sensitive) ("AEO"), and it ruled that the European Union General Data Protection Regulations (GDPR) does not apply in Board proceedings. As to the motion, Opposer Chicago Mercantile Exchange (CME) failed to show good cause for modification of the SPO. As to the GDPR, the Board found that the SPO adequately protected any personal information that Intercontinental Exchange (ICE) sought to redact from its discovery responses. Intercontinental Exchange Holdings, Inc. v. New York Mercantile Exchange, Inc. and Chicago Mercantile Exchange, Inc. v. Intercontinental Exchange Holdings, Inc., 2021 USPQ2d 988 (TTAB 2021) [precedential] (Order by M. Catherine Faint, Interlocutory Attorney).


Modification of the SPO: Under the SPO, which is automatically entered in all inter partes proceedings, only outside counsel have access to confidential material and information that is designated as AEO. However, under Rule 2.116(g), the SPO may be modified by stipulation approved by the Board, or upon a motion granted by the Board. CME sought to designate either of two individuals as an in-house counsel with access to AEO.

To establish good cause to allow disclosure of AEO material to in-house counsel, the movant must provide "a particular and specific demonstration of fact, as distinguished from stereotyped and conclusory statements," based on "the factual circumstances surrounding each individual counsel's activities, association and relationship with a party."

The Board applied a three-element test to determine "whether, to whom and under what circumstances a protective order may be amended to allow release of AEO to in-house counsel:

  • (1) consideration of a party’s need for the confidential information in order to adequately prepare its case, 
  • (2) the harm that disclosure would cause the party submitting the confidential information, and 
  • (3) the forum’s interest in maintaining the confidentiality of the information sought.
Akzo N.V. v. U.S. Int’l Trade Comm’n, 808 F.2d 1471, 1483-84, 1 USPQ2d 1241, 1249 (Fed. Cir. 1986).

The Board "must be able to balance the risk of inadvertent disclosure of trade secrets or commercially sensitive matter against the risk that protection of those trade secrets will impair CME's prosecution of [its] claims."

CME did not provide declarations from the two individuals as to their specific duties. The Board could not find that the individuals are not involved in competitive decision making, since they are involved in "legal issues related to intellectual property," which include licensing agreements. In any case, CME did not provide any evidence regarding the first element of the test: the need for its in-house counsel to have the information. As to the second factor, the Board found that potential disclosure of ICE's competitive information "may provide a competitive advantage to CME and such disclosure would harm ICE." As to the third factor, the Board noted that "sensitive business information is central to the Board's fact-finding process," that the scope of discovery is narrower in Board proceedings that in civil cases, and that the Board provides a Standard Protective Order as a means to protect such information. In short, the Board has an interest in "protecting confidential information and protecting against its inappropriate release."

The Board concluded that CME failed to demonstrate good cause and a need for in-house counsel to have access to ICE's confidential information, and so it denied the motion for amendment of the protective order

Applicability of the EU Privacy Regulation: CME raised the issue of whether ICE may redact names, addresses, and other information from its documents and ESI originating in the EU on the basis that the GDPR requires such redaction. ICE argued that forcing it to produce such information could subject it to monetary penalties under the GDPR.

The GDPR is an EU regulation that seeks to protect the privacy of EU citizens' personal data by limiting transfer of such information among EU member states as well as between EU countries and the United States. The Board noted that the GDPR does not per se bar disclosure of protected information when "the transfer is necessary for the establishment, exercise or defence of legal claims," provided that the information is "relevant and necessary" to the litigation.

The Supreme Court has set out five factors to be considered in balancing the interests of the United States and the party seeking discovery, on the one hand, and the foreign state's interest in secrecy, on the other hand:

  • (1) the importance to the litigation of the documents or other information requested;
  • (2) the degree of specificity of the request;
  • (3) whether the information originated in the United States;
  • (4) the availability of alternative means of securing the information; and
  • (5) the extent to which noncompliance with the request would undermine important interests of the United States, or compliance with the request would undermine important interest of the state where the information is located. 

Societe Nationale Industrielle Aerospatiale v. U.S. Dist. Court, 482 U.S. 522, 544 n.28 (1987).

As to the first element, the Board concluded that the identity and contact information of current or former employees and others is directly relevant to the claims in dispute, in order to authenticate documents, identify parties who may have discoverable information, and determine how the involved mark is used. ICE failed to show why "basic discoverable information" submitted under the SPO should be redacted.

As to the second element, CME narrowed its requests to seek only "representative documents." That was sufficiently specific since it seeks business records commonly produced in U.S. litigation and is not unduly burdensome.

As to the third, although some of the requested information is stored on servers in the EU, discovery is normally permitted, "particularly where the documents, even if located in foreign countries, are in the possession or control of the U.S. company."

Under the fourth element, ICE argued that it will produce information regarding U.S-based personnel and so EU-materials will be unnecessary. The Board, however, concluded that this approach was not acceptable because it is not the same as supplying the basic, discoverable information regarding the names of those who have sent or received communications.

As to the fifth element, sometimes considered the most important, the Board pointed out that the United States has a "strong interest in ensuring parties in proceedings before the Board have access to the information they need to litigate their claims and for the Board to fully and fairly adjudicate them." 

As to ICE's assertion that it was at risk of "substantial monetary penalties" under the GDPR, ICE did not identify how disclosure of the information would violate the GPDR when a protective order is in place, nor did it show that there has been any enforcement of the GPDR when information has been produced under a protective order in U.S. litigation.

Weighing all the factors, the Board found that ICE is sufficiently protected by the SPO. Therefore ICE was ordered to produce the requested information in unredacted form under the appropriate tier of confidentiality.

Read comments and post your comment here.

TTABlogger comment: Will this strong language about the importance of discovery in TTAB proceedings encourage the weaponization of discovery - i.e., the use of sweeping discovery demands as a bludgeon?

Text Copyright John L. Welch 2021.

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