Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_04-cv-05368/USCOURTS-cand-3_04-cv-05368-8/pdf.json

Nature of Suit Code: 380
Nature of Suit: Other Personal Property Damage
Cause of Action: 28:1331 Fed. Question

---

United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

BEILSTEIN-INSTITUT ZUR FORDERUNG

DER CHEMISCHEN WISSENSCHAFTEN ET

AL,

Plaintiff,

 v.

MDL INFORMATION SYSTEMS, INC.,

Defendant. /

No. C 04-05368 SI

ORDER DENYING MOTION TO MODIFY

PROTECTIVE ORDER

By letter brief, plaintiff seeks modification of the protective order in this matter to allow counsel

for plaintiff’s affiliated corporation to view and use documents produced by defendant in related

litigation in Germany. For the following reasons, the Court DENIES plaintiff’s motion. 

BACKGROUND

Beilstein’s suit against MDL stems from MDL’s alleged tortious interference with contract and

unfair competition related to an agreement between the parties under which MDL would market

Beilstein’s electronic database of organic chemistry research. A copyright infringement suit arising

from this relationship is pending in Germany between corporate affiliates of the parties. The parties

came to terms on a protective order in June 2005, with one exception: the parties could not agree on

whether plaintiff’s counsel in the German action should be allowed to review documents produced in

this litigation for use in the German case. After letter briefs on this issue, the Court on June 22, 2005

entered a protective order which did not allow Beilstein to turn over any protected documents to its

Case 3:04-cv-05368-SI Document 103 Filed 05/12/06 Page 1 of 5
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2

German counsel.

Beilstein has since obtained new counsel, and now seeks to modify the protective order to allow

German counsel to view protected documents. Unlike its previous letter brief on this issue, Beilstein

now cites case law and asserts that it will agree to a protective order in the German suit providing

protection mechanisms essentially identical to those of the order in effect in the instant case. 

DISCUSSION

At the outset, MDL contends that plaintiff’s motion is more accurately described as a motion

to reconsider the prior order, and that Beilstein has not met the requirements of Local Rule 7.9 since it

has not shown a material difference in fact or law, emergence of new material facts or law, or a failure

by the court to consider material facts or dispositive legal arguments. As outlined below, the Court’s

previous order did not consider applicable legal argument, and the motion shall be dealt with on the

merits.

In support of its argument to modify the protective order, Beilstein cites to Foltz v. State Farm

Mut. Auto. Ins. Co., 331 F.3d 1122 (9th Cir. 2003), Beckman Indus., Inc. v. International Ins. Co., 966

F.2d 470 (9th Cir. 1992), and Olympic Rfg. Co. v. Carter, 332 F.2d 260 (9th Cir. 1964). Olympic

involved an antitrust suit brought against Standard Oil Company. The plaintiff subpoenaed documents

filed under seal years earlier in a government antitrust suit against Standard Oil. Olympic, 332 F.3d at

261. The district judge refused to modify the protective order that kept the documents under seal and

quashed the subpoena, finding that the documents contained trade secrets and other sensitive data. Id.

at 263-65. The Ninth Circuit reversed, holding that the plaintiff was entitled to the documents, “subject

to reasonable restrictions as to disclosure.” Id. at 266.

Beckman dealt with a similar situation. A number of companies sought to intervene in a settled

and dismissed lawsuit that had concerned the scope of environmental impairment liability insurance

policies. Beckman, 966 F.2d at 471. The intervenors sought access to six deposition transcripts from

that action for use in a state court proceeding, and therefore sought to modify the protective order in the

earlier action. Id. The district court granted the motion to modify the protective order, and the Ninth

Circuit affirmed, stating that “Ninth Circuit precedent strongly favors disclosure to meet the needs of

Case 3:04-cv-05368-SI Document 103 Filed 05/12/06 Page 2 of 5
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3

parties in pending litigation.” Id. at 475. The court believed that the privacy interests involved could

be adequately protected by putting the intervenors under the same restrictions as contained in the

original protective order. Id. at 476. Further, modifying the protective order would eliminate

duplicative discovery. Id.

In Foltz, parties involved in analogous state court proceedings against State Farm sought access

to materials produced by State Farm pursuant to a protective order. See Foltz, 331 F.3d at 1129.

Relying on Olympic, the court noted that principles of judicial economy favor access to discovery

materials to meet the needs of parties in collateral litigation where restrictions on collateral disclosure

will continue to protect the privacy interests at stake. See id. at 1131-32. The Ninth Circuit remanded

the case to the district court, ordering it to authorize release of documents it deemed relevant to the

collateral action. See id. at 1139.

These three cases involved situations where analogous proceedings were or had been pending

in state and/or federal courts. Since the documents were discoverable in the collateral actions,

modification of the protective orders prevented inefficient, duplicative discovery, and also served the

purpose of full disclosure underlying discovery. See Foltz, 331 F.3d at 1133-34; Beckman, 966 F.2d

at 475; Olympic, 332 F.2d at 265. The Foltz court agreed with the district court’s statement that a

collateral litigant has no right to obtain discovery materials that would not be discoverable in the

collateral litigation, although it found that the district court erred by not actually applying this principle

and not undertaking a relevance determination. See Foltz, 331 F.3d at 1133-34.

MDL asserts that Germany does not allow American-style discovery, and that it is highly

unlikely that the German tribunal would order production of the documents at issue here. Beilstein

asserts that Rule 27.1 of the Rules for the German Institute for Arbitration gives the German tribunal

discretion to compel the production of documents after Beilstein specifically identifies the documents

through information such as dates, authors, and subject matter. However, MDL asserts that Beilstein

is unable to satisfy this requirement without passing on “confidential” or “attorneys eyes only”

information to German counsel, while Beilstein contends that MDL would have no basis to protect such

descriptive information about the documents. 

The parties do not cite, and the Court is not aware of, a Ninth Circuit case in which the Olympic

Case 3:04-cv-05368-SI Document 103 Filed 05/12/06 Page 3 of 5
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4

line of cases has been extended to apply to collateral proceedings in a foreign country. However, the

Federal Circuit, in an opinion cited by neither party and over dissent, has upheld such extension by a

court within the Northern District of California. See In re Jenoptik AG, 109 F.3d 721 (Fed. Cir. 1997);

see also Infineon Techs. AG v. Green Power Techs. Ltd., 2005 U.S. Dist. LEXIS 11877 (D.D.C. June

17, 2005) (following Jenoptik). The Jenoptik court applied Beckman in allowing modification of a

protective order to allow the plaintiff to use discovery material from a U.S. patent infringement case in

an infringement case in Germany between the same parties and involving a counterpart patent. See

Jenoptik, 109 F.3d at 722-23. The Jenoptik court reasoned that the plaintiff’s agreement to be bound

by the same protective provisions in the German suit as it was in the U.S. suit was sufficient to satisfy

the Beckman rule. See id. at 723. 

This Court does not agree with the Jenoptik court’s extension of the Olympic line of cases into

the international context. Inherent in the considerations of judicial economy upon which Olympic and

its progeny rest is that the discovery rules and principles at play in the collateral proceedings mirrored

those of the court allowing the release of discovery materials. This Court is unfamiliar with German

discovery rules, and thus has no basis to conclude that considerations of judicial economy would be

served by releasing confidential materials for use before the German tribunal. 

Doing as Beilstein asks would instead create the risk that this Court would subvert German

procedural rules. As outlined in Judge Newman’s well-reasoned and persuasive Jenoptik dissent, “it

is not the role of this nation’s courts to adjust the positions of the parties before the tribunal in Germany,

by circumventing German law.” Jenoptik at 724 (Newman, J., dissenting). Judge Newman went on to

cite a section of the German Civil Code under which the information sought by Beilstein may well not

be discoverable. See id. at 725 (concerning expert testimony, under German law a witness may legally

refuse to answer questions regarding business or industrial secrets). The potential for circumvention of

German law would thus appear to be high; conversely, the Court cannot discern any undue prejudice

to Beilstein if it simply goes through whatever process is in place in Germany to discover such

documents. On balance, the Court finds that concerns of international comity far outweigh any concerns

of judicial economy that may or may not exist in this context. 

Furthermore, Congress has created an avenue by which this nation’s courts may compel

Case 3:04-cv-05368-SI Document 103 Filed 05/12/06 Page 4 of 5
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

5

document production for use in foreign litigation upon request by a foreign tribunal or interested party.

See 28 U.S.C. § 1782. Beilstein makes no mention of § 1782 or associated case law, and its

unsupported, cursory statements concerning German discovery rules do not meet the high burden of

proof courts have placed on § 1782 requests brought by litigants to show that the documents would be

discoverable in the foreign jurisdiction. See Jenoptik, 109 F.3d at 724 (Newman, J., dissenting).

Modification of the protective order in this case would thus not only risk circumvention of German law,

but would circumvent the framework designed by Congress to deal with international discovery issues.

CONCLUSION

For the foregoing reasons, the Court hereby DENIES plaintiff’s motion to modify the protective

order (Docket # 86).

IT IS SO ORDERED.

Dated: May 12, 2006

 

SUSAN ILLSTON

United States District Judge

Case 3:04-cv-05368-SI Document 103 Filed 05/12/06 Page 5 of 5