Monday, March 14, 2022

Precedential No. 7: TTAB Sanctions Party for Flagrant Violation of the Standard Protective Order

In this consolidated opposition proceeding, Opposer Revolution Jewelry Works disclosed Applicant Stonebrook Jewelry's attorneys'-eyes-only (AEO) information in a TTAB filing and allowed its principal to attend an AEO deposition unbeknownst to Stonebrook. Stonebrook moved for judgment as a sanction for the violations of the Standard Protective Order, but the Board refused to go that far, finding lesser sanctions appropriate. Revolution Jewelry Works, Inc. v. Stonebrook Jewelry LLC d/b/a Revolution Jewelry, 2022 USPQ2d 229 (TTAB 2022) [precedential].

Under Rule 2.116(g), the Board's Standard Protective Order is automatically in place in every inter partes proceeding, to govern the exchange of information between parties. It provides that information marked "Attorneys' Eyes Only" may be viewed only by outside counsel for the parties (and by independent experts or consultants). 

Here, during a video deposition under FRCP 30(b)(6) in which Stonebrook's principal, Eric Platt, was the designated witness, Stonebrook produced to Revolution certain documents marked Attorneys'-Eyes-Only (including tax filings and a customer list with purchase amounts). Prior to the deposition, the parties had agreed that the entire deposition would be designated AEO. Counsel for Revolution did not reveal that Jennifer Farnes, Revolution's president and majority shareholder, was present with Revolution's counsel during the deposition.

Stonebrook first learned that Farnes attended the deposition in a response to Stonebrook's summary judgment motion, which response included a declaration from Farnes stating that she attended the deposition and commenting on Platt's testimony. She included one of Stonebrook's AEO documents as an exhibit to her declaration.

Stonebrook moved for entry of judgment as a sanction. Revolution's counsel, in response, stated that the violation was "unintentional" and entirely the fault of counsel. He feebly asserted that he thought a protective order still had to be negotiated, that each party could be privy to the other's depositions without violating any order, and that documents would later be designated confidential. Counsel also argued that the filing of the Farnes declaration showed that counsel did not act in bad faith, and he maintained that Revolution gained no advantage in this proceeding by her attendance at the deposition.

Under Rule 2.120(h), the Board may enter appropriate sanctions for violation of a Board order relating to discovery, including the Standard Protective Order. The sanctions may include those set forth in FRCP 37(b)(2), such as prohibiting the introduction of matters into evidence, striking pleadings, or entering judgment. The Board also has the power to enter sanctions "that extends from the Board's 'inherent authority to control the disposition of cases on its docket.'"

Entry of judgment is a "harsh" sanction, generally "warranted in cases of repeated failure to comply with orders of the Board, where a lesser sanction would not be effective." Counsels' professed ignorance that the Standard Protective Order was automatically in place did not excuse their actions in allowing their client to covertly view AEO information. An attorney representing a party "is expected to know and strictly comply with the Trademark Rules of Practice and, where applicable, the Federal Rules of Civil Procedure."

The Board found it troubling that, putting aside counsels' lack of attention to the rules and the Board's protective order, they disregarded the agreement that the deposition was to be AEO and showed their client documents marked "AEO." And as a matter of common courtesy and transparency, they would be expected to identify all those present at the deposition.

Revolution's contention that access to the AEO information gave it no advantage in this proceeding was meritless: access allowed Farnes to attempt to undermine the testimony of Stonebrook's principal, and it ignored the purpose of the AEO designation "to prevent an unfair competitive advantage in the marketplace."

The Board concluded that sanctions were necessary to deter similar conduct in the future. As required by precedent, the Board first considered whether lesser sanctions than entry of judgment and it found the following sanctions to be "sufficiently effective and appropriate for the violations:"

It is hereby ORDERED:

• Counsel for Opposer, Mr. Simpson and Ms. Olson, are barred from accessing, viewing, or discussing documents produced by Applicant designated “Attorneys’ Eyes Only” for the duration of this proceeding;

• Mr. Simpson and Ms. Olson are also barred from serving, filing and signing submissions in this proceeding or participating in trial depositions;

• Opposer is barred from introducing at trial or on summary judgment Applicant’s documents that were designated “Attorneys’ Eyes Only” and the Rule 30(b)(6) deposition of Mr. Platt;

• Opposer is barred from deposing Mr. Platt again for any reason, including cross-examination if Applicant presents his testimony at trial or on summary judgment; and

• Opposer is barred from presenting at trial or on summary judgment any testimony, whether in the form of an oral deposition or declaration, from Jennifer Farnes, Opposer’s President.

Read comments and post your comment here.

TTABlogger comment: Do you think this sanction was enough? Should the law firm representing Revolution have been barred from further representation of Revolution in this case?

Text Copyright John L. Welch 2022.


At 9:36 AM, Anonymous Catherine said...

I think these are some pretty severe sanctions that in many (most?) cases are likely to cost the violator a victory. So for a first offense, even one this egregious, I think these sanctions are sufficiently severe. If judgment (the ultimate sanction) is awarded for a first offense then there is nowhere to go from there, and at the end of the day these kinds of severe sanctions end up delivering judgment anyway except in cases where the issues or witness are tangential to the gist of the case. Appropriate, IMHO.

At 10:04 AM, Anonymous Laura said...

I agree with Catherine -- the sanctions in this situation virtually guarantee a loss for the Opposer. I do think they are appropriate - if I were the Board, I'd want to make it impossible for the offender to use anything that derived from the AEO docs/info in question and also bar the lawyers who made such a terrible decision and offered such a lame defense. Maybe the client could improve its chances by firing current counsel and getting new counsel, hoping that the AEO evidence and further info from the deposed guy isn't necessary for proving up their case.


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