Portrait of a young businessman with finger on his lips

On July 1, 2016, The Board awarded attorneys’ fees as a sanction for failure to comply with an agreed protective order. RPX Corp. v. Applications in Internet Time, LLC, IPR2015-01750, IPR2015-01751, IPR2015-01752 (PTAB July 1, 2016). In these IPRs, the patent owner (AIT) disclosed the petitioner’s (RPX’s) confidential information to its president, an attorney representing it in a district court case to which RPX is not a party, and to the CFO of a non-practicing patent licensing company serving as an advisor to AIT. In its order allowing RPX to seek attorneys’ fees, the Board emphasized the importance of promoting respect for and meticulous observance of protective orders.

Although a protective order had not yet been entered at the time of the alleged violation, the parties had agreed by email to abide by the Standing Default Protective Order set forth in the Trial Practice Guide. When AIT filed its Preliminary Response, that response included acknowledgements of the protective order signed by three individuals. At that time, RPX learned for the first time that confidential material had been shared with those individuals. When pressed for the identity of those individuals, AIT identified one as its president, one as its counsel in a district court proceeding to which RPX is not a party, and one as an advisor to AIT regarding the IPRs.

AIT took the position that its president was a “party” under § 2A of the Protective Order and that the other two individuals were “other employees of a party” under § 2E of the Protective Order. However, § 2E states that access to confidential information to those individuals may be provided only upon agreement of the parties or by order of the Board. AIT acknowledged that it had not sought prior agreement to disclose information to those individuals. The identified advisor is described as the CFO of “the #3 NPE by volume in 2014 (over 100 litigations filed).” Because RPX’s core business is assisting its clients in defending themselves against the assertion of patent rights by NPEs (non-practicing entities), RPX stated that it would never have agreed to disclose to that individual.

Complete good faith compliance with protective orders is essential to modern discovery practices.

In an order entered on May 6, 2016, the Board authorized RPX to file a Motion for Attorneys’ Fees. It agreed that ATI’s conduct was a breach of the protective order and stated that “complete good faith compliance with protective orders is essential to modern discovery practices.”

Turning to AIT’s specific actions, the Board agreed that the disclosures to litigation counsel and advisor required prior agreement or a Board Order. The Board declined to determine if the AIT president constitutes a party under the default Protective Order, but revised the Protective Order in these IPRs to clarify that a party is only an owner of a patent and individuals named in the proceeding. Officers of a corporate entity named in the proceeding are instead covered by§ 2E, which requires agreement of the parties or an order of the Board before disclosure. The Board also ordered AIT to submit more detailed declarations from the recipients of the confidential information identifying the scope of the disclosure, including identification of any confidential information to which the individual was exposed by any means (documents, oral statements, or otherwise), certifying that the declarant has destroyed any physical record of that information and any copies, explain any uses of that information to date, and agree not to use it for any purpose moving forward. The Board agreed that RPX had suffered harm to the extent that it had to expend time and money enforcing clear terms of the Protective Order that AIT should have been following without RPX’s efforts.

RPX submitted its fees evidence and sought $13,559.97 as the appropriate amount of fees covering the work of outside counsel “subsequent to AIT’s November 30 breach and relate[d] solely to addressing AIT’s breaches of the protective order.” The Board awarded that amount over AIT’s objections.

As IPR proceedings have become an increasingly important part of an overarching patent enforcement strategy, parties must be cognizant of what can and cannot be shared with the employees and attorneys handling different portions of the enforcement. The Board’s orders in these IPRs emphasize the Board’s expectation of strict compliance with its protective orders and serve as a reminder of how that compliance can limit coordination of the many moving parts of copending proceedings.