STATIC MEDIA LLC v. LEADER ACCESSORIES LLC
Oral Argument — 04/08/2022 · Case 21-2303 · 45:07
0:00
Judge DYK
to our final case this morning, number 21-2303, Static Media LLC versus Leder Accessories LLC.
0:08
Appellant Attorney (Aaron Wayne Davis)
Okay, Mr. Davis. Good morning, Your Honors. May it please the court.
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In this case, there were two categories of information that were shared by my client,
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Mr. Lee, with Mr. Heck. The first category was non-confidential information concerning
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non-infringement, invalidity, and other defenses on the merits, about which both attorneys
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and their clients had a joint interest. It is undisputed that this first category of
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information was the subject of most of the information that was shared as part of this
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joint defense agreement. It is also undisputed that the non-confidential information related
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primarily to Leder's motion for summary judgment of non-infringement and invalidity
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against a client was shared.
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In fact, all the summary judgment submissions were publicly filed by both sides. Both Lee
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and Heck testified that their primary focus of the joint defense communications was this
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summary judgment motion.
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Now, the second category of information that was shared by Lee to Heck was very limited
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and was also undisputed that it was the only static media confidential information that
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was shared.
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And that was the royalty rate information that static media charged for the licensing
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of its design patent at issue. Mr. Lee had a legitimate reason to disclose that information
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to Mr. Heck and did so under the terms of the protective order. There was nothing in
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the protective order...
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Judge TARANTO
I'm sorry, what was the legitimate reason?
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Appellant Attorney (Aaron Wayne Davis)
Yes, so that they could collaborate on what a reasonable royalty should be in this case.
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Judge TARANTO
Doesn't that suggest, and I think the other side suggests in its brief,
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that that collaboration acknowledges awareness, either actual or constructive awareness on
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Mr. Lee's part that Mr. Heck would be using it in his defense in the parallel litigation?
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Appellant Attorney (Aaron Wayne Davis)
Well, I think we got two different agreements that are being, or I guess documents, that
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are being conflated into one. One is the joint defense agreement.
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agreement, which talks about communications that are remaining privileged or
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confidential between two parties that have a joint interest. The other is the protective
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order, which talks about... Right, but I guess I'm thinking in particular of
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Judge TARANTO
what is it, Appendix 98, Paragraph 11, where Mr.
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Lee, that's the supplemental declaration, I think, the second
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declaration of Mr. Lee, where he says, I gave this to Mr.
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Hecht for use
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in the joint defense, or I forget the exact language. Yes, he said
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Appellant Attorney (Aaron Wayne Davis)
I sent to Sam the deposition transcripts in the instant action for more
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effective joint defense consultation discussion. Right.
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Judge TARANTO
And if the standard, at least for the
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civil contempt, just whether there can be civil contempt
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finding, is, as I think the Supreme Court said in Taggart,
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whether there was a reasonable
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basis
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for thinking that the conduct was not a violation, which I think here turns into
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a reasonable basis for thinking that the information would be used
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only for the current lawsuit,
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why can the district court not legitimately
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have found that just was not reasonable in the context, which is, I think,
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Appellant Attorney (Aaron Wayne Davis)
what the district court said. Yeah, there's one thing
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to say about this particular sentence that we're citing to about the deposition transcripts, is that
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most of those deposition transcripts were not confidential. Well, most
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doesn't take care of the problem. I agree, most, but there was
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he's saying deposition transcripts for the effective joint defense and
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consultation, which these were the things that were cited in the
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summary judgment motion. But there is, as you say, there was a
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portion of that that was confidential, and that's where the protective order comes into play
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and to say, Mr. Hecht, if you're going to get this information and you're
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going to use it for purposes of this case,
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that's okay. But you can't take that information and then
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trot off to the South Florida action and use it in that case. If you want to
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Judge DYK
Can we just back up one second? Because I'm not sure what the magistrate judge
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and the district judge were saying here. I mean, there seems to be two possible
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interpretations of those decisions. One, that
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the lawyers for static
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media were responsible for what Hecht did in the
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Florida case.
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His improper disclosure of this information. That seems to me to be a very questionable
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finding to the extent that it's there. The other possibility is that the district
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court and the magistrate judge are saying, the mere fact that you supply information
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to another party for developing a joint defense strategy is in and of itself a violation of
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of the protective order, a use within the meaning of the protective order.
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Which of those or both do you understand the ruling to be?
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Appellant Attorney (Aaron Wayne Davis)
Yes, I would say that the second one is what the court is saying.
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In and of itself, by Mr. Lee giving it to Mr. Hecht for whatever purpose, is wrong.
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Judge DYK
It was given to develop a joint defense strategy, right?
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Which doesn't necessarily, it seems to me, imply that the information was going to be disclosed in the other suit,
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but that it was going to be used for developing a joint defense strategy.
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So if that's what the ruling is here, we have to decide whether that's a violation of the protective order.
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In other words, what is meant by use within the meaning of the protective order?
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And that's not a question that is...
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It's entirely clear to me whether use for developing a joint strategy is a use for other than this action,
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or whether use contemplates some sort of disclosure of the information,
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which your clients are you really not responsible for.
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Appellant Attorney (Aaron Wayne Davis)
Yes, and I think if we go to the purpose of use, or what does use mean,
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it's certainly anything that a leader,
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Mr. Lee had prevailed on in this particular suit,
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could conceivably help Mr. Hecht and his client in his case.
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So, I mean, the idea that that's true of any other company that could ever be sued by Static Media on this patent.
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Anything positive, or if there was an invalidity holding, or a certain royalty was established,
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that could conceivably help any number of other companies down the road
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who had nothing to do with the company.
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So, I think, under the terms of the protective order,
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Mr. Hecht could collaborate with Mr. Lee and talk about what is a reasonable royalty.
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They never actually got to that point of needing to do that,
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because the summary judgment ruling was...
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Judge DYK
In other words, developing a strategy as to what a reasonable royalty is without disclosing this information.
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Right.
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And your argument is that that would be permissible within the scope of the NDA.
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Appellant Attorney (Aaron Wayne Davis)
Correct. And in the protective order.
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And in the protective order.
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That's what I mean by protective order.
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Yeah, yes.
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And so, to that end, so there's a more, again, there's more kind of a general,
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we're going to collaborate on some issues, which is the joint defense agreement.
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And then there's the specific, the protective order, which talks about, on the other hand,
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separate from the joint defense agreement,
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specifically apply to how the confidential information from this case was,
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and was not,
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and was not to be used.
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So it could be used for purposes of this case,
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but had Mr. Lee, for example, been flouting or disregarding the terms of the protective order
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in favor of the joint defense agreement, saying,
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well, that's all I need, I don't need this protective order,
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he wouldn't have specifically referenced the order,
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and only that order, in his emails to Mr. Hecht when he was disclosing the confidential information.
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He didn't say, here's the confidential information,
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and you know our joint defense agreement, keep it secret between us.
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He pointed Mr. Hecht on both occasions,
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the only two occasions in which there was a sharing of that confidential information,
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saying, you know, remember the protective order, remember the terms of that, abide by that.
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In fact, he had him, he had Mr. Hecht sign the written assurance that Mr. Hecht would follow the protective order.
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And one of the terms of both the protective order and the written assurance itself is that
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that information was,
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was only going to be used for purposes of this case.
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Mr. Lee tested...
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Judge TARANTO
Can I ask you this?
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Yes.
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I guess getting back to Judge Dyck's question,
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did you make an argument either here in your brief or to the district court,
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not that Mr. Lee acted in good faith and all that,
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but that the mere use by Mr. Hecht to formulate his own strategy for dealing with,
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with the Florida case, was it, the Florida case,
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is simply not an impermissible use under the protective order?
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Yeah, I don't think him...
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I think my question is, did you make that argument?
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Appellant Attorney (Aaron Wayne Davis)
Sure.
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Yes.
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You have to, you know, Mr. Hecht could look at that and say,
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well, you know, how could this benefit me, I suppose, in some other purpose?
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But to use that information, he had to go, as Mr. Lee testified and the district court noted,
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Mr. Hecht would...
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He would have to go and ask Discovery in the South Florida case
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to get that information so that he could use it.
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Oftentimes, attorneys are tasked with having information
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that they can only use for particular purposes or in a particular context.
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It happens in trial.
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It happens during discovery.
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People they can share it with, people they can't share it with.
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Purposes they can use it for and not use it for.
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And that was Mr. Hecht's responsibility to, if he wanted to go in his Florida case
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and use that information, he would have to go and ask Discovery.
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If he wanted to go in his Florida case and use that information
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and bring that out in evidence, he needed to ask the Discovery and get it.
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And that would have been perfectly permissible.
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And that is exactly what Mr. Lee expected that Mr. Hecht would do.
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If you look at, you know...
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Judge TARANTO
Am I right in remembering that either the magistrate judge or the district court
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or both said that that would be a permissible use, that is, to decide what discovery to require?
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Yes.
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Appellant Attorney (Aaron Wayne Davis)
In fact, I believe it was, if we're thinking about the same thing here.
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Judge TARANTO
I'm not sure that they did, actually.
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Appellant Attorney (Aaron Wayne Davis)
I'm looking at Appendix 22.
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Defendant could have shared its discovery request with OJ Commerce's counsel.
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Judge TARANTO
Discovery requests.
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Appellant Attorney (Aaron Wayne Davis)
Yes.
11:52
Yes.
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Who would have been free to obtain the same confidential information as part of that lawsuit.
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He could have done that.
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And, yes, he was free to go and ask for that information for purposes of use in that case.
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Judge TARANTO
But at least at that page, the district court did not say Mr. Hecht could have,
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consistent with the protective order, heard this confidential information,
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received it, and used his understanding of that information to formulate discovery requests.
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Appellant Attorney (Aaron Wayne Davis)
That's not...
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That's not what he said there.
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I would agree with that.
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Judge TARANTO
I don't remember your arguing that.
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Appellant Attorney (Aaron Wayne Davis)
Right.
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What we're saying is, yes, he could have asked discovery for that information in the South Florida case
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if he wanted to use that information in the South Florida case.
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Judge REYNA
He could have sought to amend the protective order.
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Appellant Attorney (Aaron Wayne Davis)
Could have done that, too, if he wanted to use that in the South Florida case.
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Judge DYK
Okay.
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But I guess, to me, the question here is not whether it was...
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It was...
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It was unforeseeable that Mr. Hecht would use the information in the South Florida case
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because it strikes me that there's very little evidence that that expectation existed.
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But whether he would use it together with Mr. Lee to develop a joint defense strategy
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applicable to both cases.
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And the question is whether it is a permissible use under this protective order to use information
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without disclosing it in the other case to develop a joint defense strategy.
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And I don't know the answer to that.
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What I do know is that this is a pretty common form of protective order
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and the joint defense agreements are pretty common also.
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I'm not aware of any authority saying that using information to develop a joint strategy
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is an impermissible use.
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Which seems to me a difficult question.
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Appellant Attorney (Aaron Wayne Davis)
I agree.
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And I think that it is a permissible use.
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And in particular, not just because I think it,
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because the protective order itself talks about it authorizes the disclosure of confidential information
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to persons furnishing a consulting service in this action.
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Which is Mr. Hecht talking with Mr. Lee about a strategy...
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Judge REYNA
Does it not...
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Does it restrict the release of the information...
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To persons that are not signatories or part of the protective order?
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Appellant Attorney (Aaron Wayne Davis)
Could you repeat that? I'm sorry.
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Does it...
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Judge REYNA
Yeah, my experience with protective orders, administrative protective orders,
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it uses the language that says you cannot disclose this information to third parties, period.
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Appellant Attorney (Aaron Wayne Davis)
Well, no.
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It talks about there are certain parties that you can't...
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Where is the protective order?
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Judge REYNA
Is it in the record?
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Appellant Attorney (Aaron Wayne Davis)
Yes. Yes.
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It is...
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Judge DYK
And Hecht was a signatory to the protective order.
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Appellant Attorney (Aaron Wayne Davis)
Yes, he was.
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The protective order was from Appendix 42 through 51.
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The 50 and 51 include the notice of adherence to protective order, which Mr. Hecht signed.
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So he was one of the permitted third parties that could obtain this information.
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And in that notice of adherence to the protective order, he's saying,
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I'm only going to use it for purposes of this action, under this protective order.
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Again, if he wanted to go and use it somewhere else for some other purpose,
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then he would need to go and ask those discovery requests,
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which were certainly not laborious to do.
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Or if he wanted to use it before he got to that point,
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he could have made a motion into this case and asked for permission to use it for,
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for example, the settlement discussions that he was going to have.
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Either way...
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Mr. Lee, who has ended up being sanctioned in this case, and his client,
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didn't do anything wrong with respect to the protective order.
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They followed the steps outlined by the protective order.
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They attempted to substantially comply with it.
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They went through the steps.
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One of the things that one of the judges had said below was,
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Mr. Lee acted serendipitously.
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And again, I don't...
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see how he did that, because he actually, you know,
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gave the protective order to Mr. Heck, had him sign it.
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It's not like he was slipping him some information and saying,
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you know, don't tell anyone I gave you this.
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He was following the terms of the protective order.
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And every time he sent the confidential information, which was only twice,
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he reminded Mr. Heck about his obligations to follow the protective order.
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Judge TARANTO
Can I ask you one question about the $1,000 issue?
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Yes.
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Okay.
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Do you agree...
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Do you agree that at least under Seventh Circuit precedent,
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obviously, now let's assume that the civil contempt was proper,
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and now we're just talking about your separate objection to the $1,000 sanction
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against Mr. Lee, particularly.
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Do you agree that if that $1,000 were to go to the court
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and not to static, that that would be permissible at least under Seventh Circuit?
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Appellant Attorney (Aaron Wayne Davis)
I would say no, because there's really two categories for a sanction.
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And one is to be compensatory.
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And, you know, I briefed that extensively.
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But if we went to a coercive, like a coercive...
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Right.
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Judge TARANTO
The bad data proves $1,000 to compensate the court for the extra time
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that the court had to put into this because of the underlying violation.
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Appellant Attorney (Aaron Wayne Davis)
Well, the coercion is what the Seventh Circuit...
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Not coercion.
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Judge TARANTO
This has nothing to do with coercion.
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Appellant Attorney (Aaron Wayne Davis)
Well, it has to do with...
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That is one of the things to be taken into consideration.
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I'm trying to get you to comply with the order.
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Judge TARANTO
But that's not what's going on here.
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And that wasn't in Baghdad, was it?
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Appellant Attorney (Aaron Wayne Davis)
In Baghdad?
18:18
Judge TARANTO
Baghdad.
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Appellant Attorney (Aaron Wayne Davis)
Oh, right.
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Right.
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Judge TARANTO
I think it's...
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Doesn't that expressly approve a payment to the court?
18:25
Yes.
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As a deterrence sanction.
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So it's not compensatory to the other party.
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Right.
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It is sort of compensatory to...
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The court, I guess.
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Why would that not equally be true here if this were revised to revert the money?
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Appellant Attorney (Aaron Wayne Davis)
Well, I think when they say deterrent, I mean,
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you're talking about trying to deter somebody from...
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The answer has to be yes.
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That happens all the time.
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Well, sure.
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I understand that.
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There's so many sanctions that are payable to the court.
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There's nothing wrong with that.
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No, I understand that.
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But as a broader answer is yes, absolutely.
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Right.
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But with respect to the particular facts of this case,
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this is a disclosure that took place two years before the...
19:03
The client came into effect.
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So there isn't anything to deter Mr. Lee from or try to stop him from doing anything.
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This is something that happened long ago.
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To the extent that Mr. Heck was to be deterred or something like that,
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then that certainly would be permissible.
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But the problem is that it was applied to Mr. Lee in a situation
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when there wasn't any sort of threat of ongoing redundancy.
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Okay.
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Judge DYK
Thank you, Mr. Davis.
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I'll give you two minutes for rebuttal.
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Thank you.
19:33
Ms. Miners.
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Appellee Attorney
Good morning.
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May it please the court, I appear on behalf of Static Media, LLC,
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the plaintiff, and the appellee in this matter.
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I'd like to jump right in.
19:47
Judge DYK
So, in part, the magistrate judge and the district judge
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seemed to find that Mr. Lee was responsible for Mr. Heck's violation of the protective order
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by disclosing this material in the Florida Action.
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And I'm having...
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I'm having great difficulty with that.
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How is it that Mr. Lee could be found in contempt for misconduct
20:13
that Mr. Heck undertook in Florida?
20:17
Appellee Attorney
Respectfully, Your Honor, I don't think that that's what the district judge was doing.
20:20
Judge DYK
Would you agree that that would not be sustainable
20:23
if that's what the district court were doing?
20:25
Appellee Attorney
I would agree that it would not be sustainable
20:27
if the district court were sanctioning someone for conduct by a third party.
20:32
Okay.
20:32
Judge DYK
So, the question here...
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The question here is whether a use within the meaning of the protective order here
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is permissible when there is a disclosure of the information to another lawyer
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for use in developing a joint defense strategy without disclosing the information.
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Is that a permissible use of the information under the protective order?
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Let me give you an example.
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Suppose...
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Suppose we have Lawyer Smith, who has this case in Wisconsin,
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and he's also the counsel for the Florida Action.
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And he secures the information.
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In his own mind, he uses that information to develop a strategy for the Florida Action.
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But he doesn't disclose the information to anybody.
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Is that a violation of the protective order?
21:29
Appellee Attorney
Well, Your Honor, if we're talking about the same attorney in both actions,
21:34
as a practical matter,
21:35
there's no way for that counsel to get information out of his head.
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So, I don't see how one would say that that would be a violation of a protective order.
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But the situation before the court is very different.
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And actually, for the...
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Judge DYK
Well, the only difference really is that Mr. Hecht and Mr. Lee are two separate counsel
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working together to develop a joint defense strategy.
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And if the information is just used to develop a joint defense strategy,
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is that impermissible under the protective order?
22:09
Appellee Attorney
The action that static media contends is impermissible under the protective order
22:15
is the very act of giving the information to Attorney Hecht.
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It's not the use of it to develop a...
22:21
Judge DYK
Why is that impermissible?
22:24
Hecht signed the protective order,
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and he was told to abide by the protective order.
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And he was working together with Mr. Lee to develop a joint defense strategy.
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Why is it impermissible that they would share information
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about the documents produced in discovery
22:44
in the Wisconsin Avenue, in the Wisconsin action for that purpose?
22:49
Appellee Attorney
It's the third piece of what Your Honor just said that makes it impermissible.
22:53
It's the fact that the attorney for leader knew that Attorney Hecht,
22:59
the counsel for the third party, OJ Commerce,
23:02
that that person was involved in a separate case,
23:05
was not involved in the static media action.
23:08
Basically, what leader is trying to do is say,
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you can separate the role of Attorney Hecht as consultant for leader
23:17
in the static media action in Wisconsin.
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You can separate that role from his role as counsel in another case for another party.
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Judge DYK
No, I don't think that's true.
23:27
I think what it is saying is that you can't give the information to Hecht
23:32
to develop a joint strategy for the two actions together.
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Appellee Attorney
And you can't, because if you're developing a strategy for the two actions together,
23:43
you are in part developing a strategy outside of this case,
23:47
and that is impermissible under the protective order,
23:50
which requires the confidential information to be used solely for this case.
23:54
Judge DYK
But the purpose of the protective order is explicitly stated in the protective order itself
23:59
is to prevent disclosure of the information to the public, right?
24:05
Right.
24:06
Using the information for joint defense purposes
24:10
doesn't fall within the stated purpose of the protective order.
24:14
If you look at the protective order at page 41, I think it is, 42,
24:27
if you look at paragraph 2 of the protective order,
24:31
it tells us what the purpose of the protective order is.
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That is to avoid public dissemination and disclosure of confidential
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or highly confidential information.
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That purpose is not implicated if there's no public disclosure,
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and it's just by conversations between signatories to the protective order
24:54
about a joint defense strategy, correct?
24:57
Appellee Attorney
I would disagree, Your Honor, because for the purposes of static media's case against Leader,
25:02
OJ Commerce is a member of the public.
25:05
They're a third party to this case.
25:07
They're a non-party in this case.
25:08
They're a signatory to the protective order.
25:10
Judge DYK
Then Hecht is.
25:11
Appellee Attorney
Yes, he is, but he's also counsel for another party engaged in litigation with static media.
25:20
We would have no issue whatsoever if what happened here was Leader giving information
25:30
designated as confidential under the protective order to an outside consulting expert
25:35
who signed off and signed on to the stipulated protective order as required
25:39
and wasn't a counsel for another party.
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That would be no problem at all.
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We also would have no problem here if Leader had only shared with Attorney Hecht
25:52
non-confidential information.
25:54
That's also allowed, but that's not what happened.
25:58
Instead, Leader shared with an outside attorney information that was designated confidential
26:04
and was to be used only for purposes of this action.
26:07
And that transaction, that conduct,
26:11
in sharing this information with Attorney Hecht,
26:14
was a use of this information for something other than the purposes of this action?
26:20
Judge DYK
I guess the question is whether a use here means using it in a sense that it is disclosed
26:25
outside of the signatories to the protective order.
26:29
What I'm suggesting to you is that perhaps paragraph two of the protective order,
26:34
talking about the purposes of the protective order,
26:36
suggests that a use that's entirely internal to people,
26:41
who are signatories to the protective order,
26:44
is not a violation of the protective order.
26:47
Do you understand what I'm saying?
26:48
Appellee Attorney
I understand, and I respectfully disagree.
26:50
I think that the proper definition or the proper construction of the word use
26:54
under the protective order includes giving it to others who are not involved in this action.
27:00
And I derive that definition from paragraph three to the protective order,
27:05
which is at page 43.
27:06
It says use solely for the purposes of this action,
27:10
and then goes on to talk about,
27:12
an inability to transfer it to others.
27:14
So I think that the proper construction of the word use in the protective order
27:18
includes a prohibition on giving it to someone who is not involved in this action.
27:27
Judge DYK
Well, but Hecht is involved in this action in the sense that he's helping to develop
27:32
a joint strategy for the two actions.
27:35
Appellee Attorney
You're correct about that.
27:36
I should have said someone who's not involved in this action and is, as Leader knows,
27:42
going to use it for a purpose.
27:44
Other than this action.
27:45
Judge TARANTO
Did the magistrate judge or district judge say anything on this very last point
27:52
that I think you just acknowledged that Mr. Hecht was, in fact,
27:57
one of the people under 4F?
28:02
Appellee Attorney
I believe that the district court acknowledged that.
28:07
The district court was aware that Attorney Hecht had signed on to the protective order
28:12
and agreed to be bound.
28:14
It doesn't change the analysis, though, Your Honor,
28:18
because as I was trying to describe before when I referenced your hypothetical,
28:25
the bell can't be unrung.
28:27
Once Attorney Hecht gets this information, it's in his head.
28:31
It can't fly out of his head when he's dealing with the case in Florida.
28:38
Judge TARANTO
Can I ask, Judge Knight suggested before that there are lots of protective orders,
28:45
and lots of joint defense agreements, which has led me to wonder,
28:49
isn't there a literature out there, whether it's a professional guidance literature
28:55
or more cases than we have seen that address this situation that say,
29:03
when you'd have a joint defense agreement, know that you may not get information subject to
29:13
a protective order.
29:15
And the case in which you are not directly appearing or vice versa.
29:19
So you can, as long as you don't use it for any other purpose than to try to develop common
29:29
joint defenses, I guess would be fine.
29:32
Appellee Attorney
Unfortunately, Your Honor, I don't have any case law to cite to you that describes that
29:37
particular scenario or answers that particular question.
29:41
Judge TARANTO
Then let me ask you this question.
29:43
So under the Supreme Court,
29:45
in the Taggart decision about civil contempt, the Supreme Court said,
29:51
based on earlier decisions, but perhaps more clearly than it had previously done,
29:55
that there should not be and cannot be civil contempt, not on the coercive side,
30:03
but on the other side, unless it is objectively unreasonable to conclude that
30:14
the conduct was not a violation.
30:18
Why isn't the discussion we've been having here an indicator that maybe it's not objectively
30:25
unreasonable to conclude that the only thing Mr. Lee knew was he couldn't have known that
30:38
Mr. Hecht was actually going to disclose it outside?
30:41
Why isn't this a case?
30:44
Why isn't this a case of objective reasonableness, even if you think the better reading of the protective order should prohibit this?
30:54
Appellee Attorney
Your Honor, I think it's objectively unreasonable because what Leader did know, you're correct,
31:00
they couldn't have known exactly what Attorney Hecht was going to do with it or whether he would bring it up in settlement communications later.
31:07
But what they did know is that he was counsel for another party that was involved in an action against,
31:14
static media, and what they did know is that the protective order clearly states that
31:20
information designated as confidential should be used solely for purposes of this action.
31:25
I think it's helpful to consider how it is that Leader and its trial counsel came to be tied to Attorney Hecht in this joint defense arrangement.
31:40
It was Attorney Hecht who reached out to Leader.
31:43
And,
31:44
and did so because of a cease and desist letter and searched patent filings and discovered the Wisconsin action and reached out to Leader.
31:52
And in his declaration,
31:55
Attorney Hecht describes how even before the joint defense agreement was actually executed,
32:00
they were already talking about defense strategies for OJ Commerce,
32:04
not for static media.
32:05
So this whole relationship between Leader and OJ Commerce started as being about OJ Commerce and not about static media.
32:14
And I think it's objectively unreasonable for Leader's counsel to have believed that by just getting Attorney Hecht to sign on to the protective order that they could provide whatever confidential information they wanted to Attorney Hecht when they knew that he was representing another party not in this action against static media.
32:39
Judge DYK
Okay, but that sounds very much like the argument that in the beginning you said,
32:44
wouldn't stand up,
32:45
that they,
32:46
that Lee should have known that Hecht would misuse the information by disclosing it in the Florida action.
32:52
I don't think there's any basis for that.
32:54
And I thought in your earlier argument,
32:57
you agreed that the order can't be sustained on that basis.
33:00
We're talking about the question of whether disclosing it to Hecht or use in developing a joint defense strategy is a clear violation of the protective order.
33:13
And the argument is that no,
33:16
it's not because it's not being publicly disclosed in the Florida action.
33:22
It's just being used in the minds of these two people to develop a joint defense strategy,
33:29
which isn't contrary to the stated purpose of the protective order.
33:33
That's the argument.
33:34
Appellee Attorney
Yes.
33:35
And my argument is,
33:38
and maybe I'm inartfully saying it,
33:41
I am not contending that it's,
33:43
that leader and its trial counsel can be held to account for attorney Hecht's ultimate use of the information.
33:51
I'm saying that they violated the protective order the instant they transferred that information to him,
33:56
because they knew at the time that he was not involved,
34:00
that he was involved in this other action.
34:04
Well,
34:04
Judge DYK
it would always be the case where it's a joint defense strategy.
34:07
You're talking about two lawyers representing parties in different actions getting together.
34:14
Appellee Attorney
Well,
34:15
as the district court noted,
34:16
there are not,
34:18
leader was not without alternative ways of dealing with this.
34:22
So as the district court said,
34:25
and this was the district judge,
34:27
not the magistrate judge,
34:29
said that there were another,
34:31
a number of different avenues for leader to be able to share this information with attorney Hecht without running afoul of the protective order.
34:40
This is on appendix page 22.
34:42
Judge DYK
So supposedly it's said to have,
34:45
well,
34:45
you better in your action use the same discovery request that we use here because there's interesting information that you'd like to get by doing that.
34:55
Is that permissible?
34:56
Could it?
34:56
Appellee Attorney
Yeah,
34:57
absolutely.
34:57
It could have done that because that's not giving,
35:01
that's not giving the confidential information to attorney Hecht.
35:04
That's just strategizing,
35:06
you know,
35:06
hey,
35:07
this is the discovery request I made.
35:10
You should think about making the same request.
35:13
That is,
35:14
that's permissible.
35:15
And that's one of the things that the district court said that leader could have done,
35:19
but did not.
35:20
Judge TARANTO
I think the hypothetical had a little bit more,
35:23
which was you really ought to look at it.
35:25
There's gold there.
35:29
Would you say that?
35:30
Appellee Attorney
Yeah.
35:30
I mean,
35:31
you can give your opinion.
35:33
That's not,
35:33
it's not disclosing the confidential information.
35:36
The confidential information was the royalty rates.
35:39
Judge REYNA
That's using confidential information to,
35:43
even if you're a lawyer and you have access,
35:47
just the confidential information and you're having a strategy session with counsel in another case.
35:54
How is it that the use of that information to say you should go pursue this angle or don't pursue that,
36:01
that particular route of negotiation?
36:04
How can that be appropriate?
36:08
Is that your argument?
36:11
Appellee Attorney
Well,
36:17
that was the district court's suggestion for how leader could have gone about conferring with attorney Hecht.
36:25
Without running a file of the protective order.
36:29
I hear what you're saying that there,
36:31
there's gotta be a line at which you're offering too much flavor of the confidential information without expressly disclosing it,
36:40
that you might,
36:41
you know,
36:41
you might be crossing the line.
36:43
I don't think that the district court's suggestion would be crossing that line.
36:48
All the district court said was they could share their discovery requests and that would have been fine.
36:54
Clerk
Okay.
36:57
Judge DYK
Unless my colleagues have further questions.
36:59
I think we're out of time.
37:00
Thank you,
37:00
Ms.
37:01
Moynihan.
37:01
Appellee Attorney
Thank you very much.
37:02
Clerk
Mr.
37:03
Judge DYK
Davis.
37:06
Appellant Attorney (Aaron Wayne Davis)
I think the,
37:07
the,
37:08
your honor's a single person analogy was certainly very appropriate.
37:13
What Static Media's counsel repeatedly said is that Lee knew that Hecht was involved in a separate case and by her very,
37:23
and stressing that as essentially therefore per se giving the information to Hecht,
37:29
was a violation of protective order.
37:31
But then that would make a situation as brought up in the single person analogy that then Mr.
37:38
Hecht couldn't have,
37:40
or Mr.
37:41
Lee couldn't have represented OJ Commerce.
37:43
Let's say Hecht wasn't even in the picture.
37:45
It was just Mr.
37:45
Lee's client was sued.
37:47
Then OJ Commerce gets sued.
37:49
They contact Mr.
37:50
Lee and says,
37:51
Hey,
37:51
we want,
37:52
you know,
37:52
you're dealing with this patent.
37:53
Why don't you represent us?
37:55
But it would preclude Mr.
37:57
Lee who had this confidential information,
37:59
for them representing OJ Commerce.
38:02
We know that can't be the case because there's scores of cases in which,
38:07
you know,
38:07
a single attorney will represent different defendants in cases.
38:12
Judge REYNA
There's also ethics and rules of professional responsibility.
38:16
I mean,
38:17
that sounds like a good example of a conflict of interest where you have an attorney who gains information from representing this client,
38:29
and then,
38:30
goes and uses it in representation of that client.
38:33
Appellant Attorney (Aaron Wayne Davis)
Well,
38:34
no,
38:34
and that's where the protective order would come into place.
38:36
It's not that Mr.
38:37
Lee could then go over to represent OJ Commerce and just carte blanche,
38:42
start using all the confidential.
38:43
They still have to go through the process of having the protective order in place and signing off just like Mr.
38:50
Hecht did.
38:50
Judge REYNA
What about the line in the protective order that says that the use of the protective order,
38:56
its parameters is limited to that particular action,
38:59
or that particular,
39:00
state?
39:03
Appellant Attorney (Aaron Wayne Davis)
Yes,
39:04
I think that's true.
39:06
If Mr.
39:07
Hecht wasn't using the confidential.
39:09
Judge REYNA
You sold it for the purpose of this action.
39:12
What action are they talking about?
39:14
Appellant Attorney (Aaron Wayne Davis)
They're talking about the case here.
39:16
Static media versus,
39:17
yes.
39:18
Judge REYNA
Okay.
39:19
So that means that anyone who's a party to this cannot disclose,
39:24
which means just give any of the information that they obtained under the protective order to somebody outside of this,
39:32
Appellant Attorney (Aaron Wayne Davis)
this action that would use it.
39:35
That is going to use it for something else other than this.
39:39
It doesn't say that.
39:40
Sure it does.
39:40
Judge REYNA
It's saying that it says shall be used solely for the purpose of this action.
39:45
So this protective order only governs the release of confidential information,
39:51
the maintenance of confidential information for purposes of one action,
39:55
Wisconsin.
39:56
Appellant Attorney (Aaron Wayne Davis)
Yes.
39:56
And that there's permissible people who can have this information disclosed to them.
40:01
Well, no,
40:01
that's,
40:02
Judge REYNA
you can disclose to those permissible people as long as it's within this action.
40:07
Appellant Attorney (Aaron Wayne Davis)
Right.
40:07
I agree.
40:08
And Mr.
40:08
Hecht's using it.
40:09
Judge REYNA
It doesn't say you can disclose,
40:11
you can disclose it to,
40:12
you know,
40:13
to anybody else.
40:14
Appellant Attorney (Aaron Wayne Davis)
Well,
40:15
I don't think he's disclosing it to anybody else.
40:16
He's disclosing it to Hecht for purposes of use in this action.
40:19
If Mr.
40:20
Hecht wants to use it for purposes of another action,
40:23
then he has to go into that action and get a protective order or come in.
40:28
Judge REYNA
You think that that's,
40:29
that's,
40:29
that's okay.
40:30
I mean,
40:30
that,
40:31
that's,
40:31
yes.
40:32
Appellant Attorney (Aaron Wayne Davis)
In fact,
40:32
there's no case that I've ever been able to find that says that receiving information as part of a,
40:39
a joint defense under a joint defense agreement when it's protected by a protective order per se violates the protective order.
40:47
And that's what the district court said is that just the act of receiving the information before you even use it in the other action is per se a violation.
40:57
And there's no case that holds that.
41:00
Judge REYNA
That may be the case,
41:01
but that's my experience with protective order information.
41:04
Just the,
41:05
the,
41:05
my,
41:06
my giving it to somebody or even my leaving it open on a,
41:10
on a desk where people can walk past it,
41:14
whether they can see it or not,
41:16
that's deemed to be a disclosure.
41:17
Appellant Attorney (Aaron Wayne Davis)
Well,
41:18
and that would be a situation in which,
41:19
you know,
41:20
that the person walking by,
41:21
for example,
41:22
or if you left it out recklessly or,
41:24
or,
41:25
you know,
41:26
something to that effect,
41:27
that person has no obligation to keep it confidential.
41:31
Under the protective order.
41:33
Mr.
41:33
Heck did.
41:34
And Mr.
41:35
Lee took steps to make sure that Mr.
41:37
Lee is going to abide by this protective order,
41:39
not the South Florida protective order or.
41:42
Judge TARANTO
Can I ask you this question?
41:43
This,
41:44
I guess,
41:44
goes back to the Mr.
41:46
Smith has two cases example.
41:49
Yes.
41:50
And you said,
41:51
oh,
41:51
that sort of thing happens all the time.
41:52
You know,
41:53
lawyer and defense number one,
41:55
when defendant number two comes up in a different case,
41:59
defendant number two calls that lawyer.
42:00
And same representative,
42:02
if that's common,
42:04
is it also common?
42:05
And all these cases have protective orders.
42:08
Let's assume,
42:09
is it common for the lawyer to go to the district court in case number one and say,
42:16
I need a modification of the protective order or not?
42:22
Because obviously everything I know from this case is going to be in my head when I represent defendant number two in case number two.
42:30
Appellant Attorney (Aaron Wayne Davis)
Yeah.
42:30
I think it would probably depend on the procedural standpoint of it.
42:34
Like,
42:34
are they,
42:34
you know,
42:35
in the same happening literally at the same time in the same status or,
42:39
you know,
42:40
in this situation,
42:41
the OJ commerce case was much further behind it.
42:44
It was actually stayed for a period of time waiting for the summary judgment decision.
42:48
So there was no particular need.
42:50
It's not like Mr.
42:51
Hecht had some immediate need for the use of this information in that case because it wasn't going anywhere.
42:58
But I think if both were happening,
43:00
at the same time,
43:01
let's say they're both on a parallel track,
43:03
then that would be one avenue for Mr.
43:05
Hecht to take or Mr.
43:07
Judge TARANTO
Smith,
43:08
I guess.
43:08
Right.
43:08
Just my question is whether you said the phenomenon of same lawyer representing defendants in two cases that overlap is common.
43:19
So I guess my question is,
43:21
is it common in that situation one way or the other for the lawyer to take measures to,
43:30
to expand the original protective work?
43:32
Appellant Attorney (Aaron Wayne Davis)
Like I said,
43:33
everything about,
43:34
I think of the procedure was such that you,
43:36
Judge DYK
that would be advised to use the information and the other action by disclosing the other action has to get permission to do that,
43:44
right?
43:44
Appellant Attorney (Aaron Wayne Davis)
Either from the court that has the original protective order or get one from the new case,
43:49
either one,
43:50
Judge DYK
one of the other disclose it in the other action.
43:53
He's just going to use it in his head.
43:55
Would he go back and get a modification of the protective order to,
43:59
Appellant Attorney (Aaron Wayne Davis)
to think in a particular way?
44:02
No,
44:03
I don't think so.
44:03
I don't think we control the thoughts,
44:05
but as far as like,
44:06
if I'm going to present it as evidence or I'm going to use it as a deposition or I'm going to do something like that,
44:10
I need to have that.
44:11
I can't just start using it in the other case and say,
44:14
well,
44:14
I had this other case.
44:16
What's the big deal that,
44:18
that,
44:18
that did protective or prescribes exactly who can use it and for what purpose?
44:22
And Mr.
44:23
Lee followed that guidance.
44:25
Mr.
44:26
Heck did not.
44:27
And Mr.
44:27
Lee should not be held.
44:28
For the sins of Mr.
44:30
Hector is in any case that holds that,
44:33
that he would.
44:34
And I believe that council had agreed to that point.
44:38
Judge TARANTO
Is,
44:38
is Mr.
44:39
Heck by virtue of his being a consultant on this case,
44:43
subject to the Wisconsin courts jurisdiction?
44:46
Appellant Attorney (Aaron Wayne Davis)
I believe he is.
44:47
I think that's part of the written insurance.
44:49
Judge TARANTO
Is that happened?
44:50
Anything happened in that regard?
44:52
Appellant Attorney (Aaron Wayne Davis)
No.
44:54
All right.
44:55
With that,
44:56
I just request reversal.
44:57
And on the contempt,
44:59
I'm finding,
44:59
and thank you very much for your time.
45:02
Thank you,
45:02
Mr.
45:03
Davis.
45:03
Thank you.
45:03
This is the case.
45:04
This is where that composes our session this morning.