Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_13-cv-02371/USCOURTS-casd-3_13-cv-02371-1/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 35:0145 Civil Action to Obtain Patent

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

Mad Catz Interactive, Inc.,

Plaintiff,

CASE NO. 13cv2371-GPC (JLB)

ORDER GRANTING MAD

CATZ INTERACTIVE INC.’S

MOTION TO MODIFY THE

PROTECTIVE ORDER 

[ECF No. 35]

vs.

Razor USA, Ltd.,

Defendant.

This is a patent infringement case. Before the Court is Plaintiff Mad Catz

Interactive Inc.’s Motion to Modify the Protective Order (ECF No. 35) filed on May

13, 2014. The Motion seeks to modify the terms of the operative protective order

such that attorney Whitney E. Peterson, Mad Catz’s General Counsel and lead trial

attorney, can review and access documents and information that Defendant Razer

USA Ltd. or other parties in this case produced and marked as highly confidential. 

On May 29, 2014, Defendant Razer filed its Opposition to the Motion. (ECF No.

36.) Then, on June 5, 2014, Plaintiff filed its Reply in support of the Motion. (ECF

No. 40.) The Court held oral argument on the Motion on July 10, 2014. (ECF No.

48.) Having considered the arguments and submissions of the parties, the Court

hereby GRANTS Plaintiff’s Motion for the reasons outlined below. 

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I. Factual Background

 Plaintiff, Mad Catz Interactive, Inc., filed suit against Defendant, Razer USA,

Ltd., for patent infringement. Plaintiff holds an exclusive license to, inter alia,

produce and sell certain computer gaming mice with an adjustable palm rest which

fall within the scope of Patent No. 6,175,370 (the ‘370 Patent). Plaintiff alleges

Defendant’s “Ouroboros” mouse falls within the scope of this Patent. Defendant

counterclaims that Plaintiff infringes on its Patent No. 8,605,063 (the ‘063 Patent)

which covers certain backlighting technology for gaming keyboards.

 The Court entered a protective order governing all document production on

May 8, 2014. As per the protective order, any documents considered to be most

sensitive by the producing party, such as documents reflecting trade secret or other

confidential research, development, financial, or other highly sensitive commercial

or business information, would be marked “HIGHLY CONFIDENTIAL –

DESIGNATED COUNSEL’S EYES ONLY.” (ECF No. 34 at 5.) Thus, only

“designated counsel” may access and review documents and information marked

“highly confidential.”

According to the terms of the protective order, Mr. Peterson, Mad Catz’s

General Counsel and lead trial attorney for this case, has limited access to the

documents. The protective order defines who is included as “designated counsel.” 

With respect to Mr. Peterson, the protective order provides that Mr. Peterson is

designated counsel, but “only with respect to documents and information produced

by third party Humanscale Corporation pursuant to a subpoena issued by Razer

USA, Ltd. and not with respect to any documents or information produced by Razer

USA, Ltd. or any other third party (unless such other third party agrees that Mr.

Peterson may have access to such documents or information).” (ECF No. 34 ¶4.) 1

The Protective Order reflects that this limitation was a compromise between the parties so as 1

to get document production underway. Mad Catz retained its right to bring the instant motion to

include Mr. Peterson as “designed counsel” without qualification. (ECF No. 28 n.1.)

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 Plaintiff filed the instant motion seeking to amend the protective order to

remove the limitations placed on Mr. Peterson as designated counsel, thereby

providing him with authorized access to all documents and information produced in

this case. Defendant opposes the amendment sought by Plaintiff, arguing Mr.

Peterson is a competitive decision maker for Mad Catz and any inadvertent

disclosures of sensitive information could both irreparably harm Razer and provide

Mad Catz with an unfair competitive advantage.

II. Legal Standard

 Parties seeking discovery are generally entitled to all information “reasonably

calculated to lead to the discovery of admissible evidence.” Fed. R. Civ. P.

26(b)(1). “On the other hand, responding parties are entitled to protection from

undue burden in discovery, including protection from misuse of trade secrets by

competitors.” Brown Bag Software v. Symantec Corp., 960 F.2d 1465, 1470 (9th

Cir. 1992); Fed. R. Civ. P. 26(c)(1)(G). A court reviewing a protective order

dispute must balance these interests.

In this case, these interests must be balanced to determine whether Defendant

Razer is entitled to the continued protection provided by the operative protective

order insofar as it restricts attorney Peterson’s access to highly confidential

information produced in this litigation. Here, because the parties stipulated to the

protective order, it was entered by the Court without a finding of good cause. (ECF

Nos. 33, 34.) As such, Defendant bears the burden of showing good cause exists for

the continued protection it seeks. In re Roman Catholic Archbishop of Portland in

Oregon, 661 F.3d 417, 424 (9th Cir. 2011) (“When the protective order ‘was a

stipulated order and no party ha[s] made a ‘good cause’ showing,’ then ‘the burden

of proof . . . remain[s] with the party seeking protection.’”); Phillips v. Gen. Motors

Corp., 307 F.3d 1206, 1210-11, n.1 (9th Cir. 2002) (“the burden of proof will

remain with the party seeking protection when the protective order was a stipulated

order and no party had made a ‘good cause’ showing.”).

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Further, the Ninth Circuit has developed a balancing test to determine when a

protective order restricting an attorney’s access to highly confidential information

may be appropriate. See Brown Bag, 960 F.2d at 1470. A court must weigh the

prejudice to the party whose attorney is being denied access to protected documents

against the risk of inadvertent disclosure of highly confidential information and the

potential harm of inadvertent disclosure to the party wishing to maintain the

protective order. Id. In doing so, the Court is to “examine factually all the risks and

safeguards surrounding inadvertent disclosure” and factor in “the nature of the

claims and of a party’s opportunity to develop its case through alternative discovery

procedures.” Id. This analysis “must be determined . . . by the facts on a counselby-counsel basis.” U.S. Steel Corp. v. United States, 730 F.2d 1465, 1468 (Fed. Cir.

1984).

III. Analysis

A. Harm to Razer from Modifying Protective Order

1. Risk of Inadvertent Disclosure

 Defendant Razer argues that “[a]s a competitor of Razer in the field of

computer gaming peripherals, Mad Catz threatens unfair competitive harm to Razer

by demanding its business insider and fiduciary, Mr. Peterson, have unfettered

access to Razer’s competitive information.” (ECF No. 36 at 5.) In contrast,

Plaintiff Mad Catz argues that there is no risk of harm through inadvertent

disclosure because Mr. Peterson does not engage in competitive decision making on

behalf of Mad Catz. The Court is persuaded that the record before the Court shows 2

Mr. Peterson is not significantly involved in Mad Catz’s competitive decision

making as it concerns Razer’s business; that there are safeguards in place at Mad

Catz to prevent the inadvertent disclosure of Razer’s highly confidential

The parties agree that the Court’s analysis of risk should focus on inadvertent disclosure, as 2

Razer does not argue Mr. Peterson would intentionally disclose Razer’s highly confidential

information.

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information to others; that there is little to no risk of inadvertent disclosure; and that

Razer has not shown significant harm would likely result from an inadvertent

disclosure. Therefore, Defendant fails to meet its burden of showing good cause

exists for the continued protection it seeks.

Whether there is an acceptable risk of inadvertent disclosure turns on the

extent to which Mr. Peterson is involved in competitive decision making as it

concerns Razer’s business. See Brown Bag, 960 F.2d at 1470. The phrase

“competitive decision making” is “shorthand for a counsel’s activities, association,

and relationship with a client that are such as to involve counsel’s advice and

participation in any or all of the client’s decisions (pricing, product design, etc.)

made in light of similar or corresponding information about a competitor.” U.S.

Steel Corp., 730 F.2d at 1468 n.3. “[T]he standard is not ‘regular contact’ with

other corporate officials who make ‘policy,’ or even competitive decisions, but

‘advice and participation’ in ‘competitive decisionmaking.’” Matsushita Elec.

Indus. Co., Ltd. v. United States, 929 F.2d 1577, 1580 (Fed. Cir. 1991).

In examining whether an attorney’s role at a company creates an unacceptable

risk of disclosure to a competitor company, courts analyze whether providing an

attorney with access to highly confidential information would place that attorney “in

the ‘untenable position’ of having to refuse his employer legal advice on . . .

competitive [] decisions lest he improperly or indirectly reveal” another company’s

highly confidential information. Brown Bag, 960 F.2d at 1471. Although a finding

that counsel is a competitive decision maker is a critical factor, it is not dispositive. 

See ST Sales Tech Holdings, LLC v. Daimler Chrysler Co., No. 07cv346, 2008 WL

5634214, at *3 (E.D. Tex. Mar. 14, 2008); see also Fairchild Semiconductor Corp.

v. Third Dimension Semiconductor, Inc., No. 08cv158, 2009 WL 1210638, at *9 (D.

Me. Apr. 30, 2009).

Defendant Razer argues that Mr. Peterson is a competitive decision maker for

its competitor, Mad Catz. In support, Razer cites Mad Catz’s “Investor Relations”

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page which states Mr. Peterson is responsible for all corporate opportunities at Mad

Catz and has negotiated numerous license and other agreements within the video

game industry.” (ECF No. 36-1 at 3.) Razer also states that Mr. Peterson is the

second-largest shareholder listed on Mad Catz’s “Investor Relations-Ownership

Summary webpage. (Id. at 4.) Razer also provides an article by the San Diego

Source, The Daily Transcript which states “Mr. Peterson works closely with the

CEO and CFO to provide advice and counsel on a host of business issues.” (Id.) 

The Court finds this evidence unpersuasive.

Mr. Peterson has three different roles at Mad Catz: (1) General Counsel; (2)

Corporate Secretary; and (3) Vice President of Business Affairs. First, he serves as

the General Counsel. As General Counsel, Mr. Peterson’s duties are to:

(a) advise management and the Board of Directors on the best methods and

manner to minimize legal risks to Mad Catz; (b) manage Mad Catz’s

intellectual property portfolio and to advise as to the legality of intellectual

property issues; (c) conduct and lead all litigation matters in state and federal

courts; (d) review contracts and advise as to their enforcement and/or

modification; (e) draft contracts using already-negotiated contract terms

supplied by Mad Catz managerial and sales staff; (f) prepare documents and

correspondence on employment matters; (f) [sic] review insurance policies

and file claims with insurance companies; and (g) ensure Mad Catz’s

compliance with all applicable laws and regulations.

(ECF No. 35-2 ¶15.)

At oral argument, Mr. Peterson represented that, in his role as General

Counsel, Mr. Peterson focuses on litigation and overarching corporate legal matters,

such as advising on SEC compliance matters and creating legal safeguards for fraud

prevention. Mr. Peterson regularly interacts with Plaintiff Mad Catz’s Chief

Executive Officer and Chief Financial Officer, but not with respect to competitive

decision making. Mr. Peterson does not regularly interact with Plaintiff’s Chief

Operating Officer, Vice President of Sales or the Vice President of Marketing. With

respect to Mr. Peterson’s involvement in licensing, Mr. Peterson maintains that he

does not set the business terms of the deals but rather focuses on the legal matters

only.

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Defendant Razer is particularly concerned that Mr. Peterson’s role in the

negotiation of licensing agreements makes him a competitive decision maker for

Mad Catz. According to Razer, Mr. Peterson’s involvement in licensing

negotiations creates an unacceptable risk that Razer’s highly confidential

information may be disclosed. Specifically, Razer points to Mr. Peterson’s

involvement in securing a license from Humanscale regarding the ‘370 Patent as

evidence that he is a competitive decision maker who should be denied access to

Razer’s highly confidential information.

The Court is not persuaded that the evidence of Mr. Peterson’s involvement

in licensing agreement negotiations is sufficient to show Mr. Peterson engages in

competitive decision making regarding keyboard and mouse products or

technology. Mr. Peterson does not negotiate the terms of the licensing agreements

but rather takes the terms from the sales and management teams from Mad Catz and

“fit[s] them into the context of a legal agreement.” (See ECF No. 35-2 ¶17.) In

addressing the Humanscale licensing deal, Mr. Peterson addressed the unique facts

underlying that deal (which arose out of litigation) and represented that after the

management team and sales people came up with the terms for the licensing

agreement with Humanscale, he “parroted” the terms to Humanscale to close the

deal. The Court finds Mr. Peterson’s representations regarding his role in licensing

negotiations to be credible and concludes that Mr. Peterson’s involvement in Mad

Catz’s licensing agreements does not constitute competitive decision making that

would create an unacceptable risk of disclosure to Razer.

Second, in his role as Corporate Secretary, Mr. Peterson’s duties are limited

to keeping minutes for the Board of Directors meetings and calling out agenda

items. (See ECF No. 35 ¶16.) Mr. Peterson represents that he acts as a “mute

stenographer” in his role as Corporate Secretary and has never been asked for input

regarding business matters.

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Third, in his role as Vice President of Business Affairs, Mr. Peterson

supervises and manages Saitek brand products for Mad Catz which are Mad Catz’s

flight simulator related products. (ECF No. 35 ¶17.) He is also in charge of

overseeing corporate opportunities for Mad Catz including mergers, acquisitions

and strategic partnerships. (Id.) Mr. Peterson papers the deals after the business

people at Mad Catz decide on which corporate opportunities to pursue.

In his role as Vice President, it appears Mr. Peterson does make competitive

decisions for Mad Catz’s flight simulation business. However, Razer has not

established that Mr. Peterson’s responsibilities with respect to the flight simulation

business create an unacceptable risk to Razer from the disclosure of sensitive

information regarding Razer’s mouse and keyboard business. Razer and Mad Catz

are not competitors with respect to the flight simulation business. Razer has not

established that Mr. Peterson’s participation in making competitive decisions on one

line of products increases the risk that confidential information regarding another

line of products will be inadvertently disclosed. Thus, Mr. Peterson’s involvement

in Mad Catz’s flight simulation business does not constitute competitive decision

making that would create an unacceptable risk of disclosure to Razer.

Regardless of which of the three roles he is serving in at Mad Catz, Mr.

Peterson represents that his office at Mad Catz is private and secure. (ECF No. 35-2

at 7 n.2.) His office is kept locked at all times when not occupied. Mr. Peterson

maintains his confidential legal files in his secure office or on restricted (to in-house

counsel only) computer drives at all times. (Id.) Accordingly, there are safeguards

in place to ensure highly confidential information is not accessed by other Mad Catz

employees.

Having reviewed and analyzed the record and arguments of counsel, the

Court is not persuaded that Mr. Peterson’s roles at Mad Catz give rise to an

unacceptable risk of disclosure such that he should be denied access to Razer’s

highly confidential information. 

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2. Potential Harm from Inadvertent Disclosure to Defendant

Defendant Razer argues that a disclosure of its highly confidential

information would give Mad Catz an unfair competitive advantage. Razer depicts

its highly confidential documents as containing information about its:

research, design, development, configuration, function, assembly, testing,

manufacture, components, operation, marketing, business and strategic plans,

third-party agreements, sale, and/or revenues for Razer’s Ouroboros mouse

(the Razer product Mad Catz alleges infringes the ‘370 patent) and/or Lycosa

keyboard (which Razer alleges practices some of the claims of the ‘063

patent).

(ECF No. 35 at 8.) Counsel for Razer argues that Razer would be especially harmed

by disclosure of its pricing and revenue information.

 Although the modification of the protective order sought by Mad Catz would

provide Mr. Peterson access to this sensitive information, Defendant Razer has not

persuasively explained how inadvertent disclosure would likely harm Razer. As an

initial matter, Razer no longer makes the keyboard that utilizes the ‘063 Patent. 

Further, while the financial documents at issue concern Razer’s gaming mice and

keyboards, Mr. Peterson does not interact with any personnel from Sales or

Marketing regarding competitive keyboard or mouse issues, nor does he interact

with the COO (who would be the individual in charge of managing Mad Catz’s

engineers and design plans for keyboards and mice). Mr. Peterson is not involved

in Mad Catz’s competitive decision making as it concerns competition with Razer’s

business. 

The Court concludes that Razer fails to meet its burden to show that specific

prejudice or harm will result if the protective order is modified to allow Mr.

Peterson access to the highly confidential documents produced in this case. 

Specifically, the Court is not persuaded on the current record that the potential harm

to Razer would be irreparable or result in a significant competitive advantage to

Mad Catz.

/ / /

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B. Harm to Plaintiff from Leaving Protective Order Unmodified

In contrast, the Court concludes that Plaintiff Mad Catz will continue to

suffer actual prejudice until its lead trial counsel, Mr. Peterson, is provided access to

the highly confidential information produced in this litigation. 

Under Brown Bag, the risk of disclosure of confidential information to

competitors must be weighed against the risk of actual prejudice – that protection of

this information will impair the prosecution or defense of the parties’ claims. 

Brown Bag, 960 F.2d at 1470. A showing that the protective order increases the

difficulty of managing litigation, without more, does not constitute actual prejudice. 

Intel Corp. v. VIA Technologies, Inc., 198 F.R.D. 525, 529 (N.D. Cal. 2000).

 However, a party can show actual prejudice where “the present litigation is

extremely complex and at an advanced stage” so that relying on newly retained

counsel “would create an extreme and unnecessary hardship.” U.S. Steel Corp., 730

F.2d at 1468; see also CytoSport, Inc. v. Vital Pharm., Inc., No. 08cv2632, 2010

WL 1904840 at *2 (E.D. Cal. May 10, 2010) (“Courts have found actual prejudice

where a party has shown that the use of in-house counsel was necessary due to the

specialized expertise of the counsel, required in order to maintain a company’s

financial stability or essential to its prosecution or defense of an action due to

outside counsel’s incompetency or lack of sufficient time to present the client’s best

case.”). Further, financial hardship is a factor when evaluating the balancing test,

but it is not dispositive. RPA Int’l Pty Ltd. v. Compact Int’l, Inc., No. 06cv1147,

2007 WL 4105725 at *3 (S.D. Cal. Nov. 16, 2007).

Razer argues that Mad Catz will not suffer actual prejudice under the current

protective order because this is a “straightforward patent case” in which the relevant

documents on the issues Razer deems to be central to the litigation are available to

Mr. Peterson. (ECF No. 36 at 10.) Mad Catz disagrees. Mad Catz argues that this

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is a complex and fact intensive patent case in which the critical documents are not

publicly available.3

In support, Mad Catz argues that its defense against Razer’s counterclaims

center around the conception and the reduction to practice of Razer’s ‘063 Patent.4

Indeed, Mad Catz alleges as an affirmative defense that the ’063 Patent is invalid

for “failure to comply with 35 U.S.C. § 102 as being anticipated by one or more

prior art references and/or because the alleged invention was known or used by

others or patented or described in a printed publication before the invention thereof

by the applicant for patent.” (ECF No. 21 at 7.) To prevail on this defense, Mad

Catz seeks to prove it “introduced its accused keyboard to the world months before

Razer filed its patent application and that Mad Catz conceived of its accused

keyboard before Razer even came into existence.” (ECF No. 40 at 12.) The Court

is persuaded that this is a complex and fact intensive patent case that may hinge on

Mad Catz’s evaluation of Razer’s highly confidential information.

Razer also argues that Mad Catz will not suffer actual prejudice under the

current protective order because Mr. Marshall, the other in-house litigation counsel

for Mad Catz, can adequately litigate the portions of the case the require access to

highly confidential information. Razer provides examples of Mr. Marshall’s

competence in taking an important deposition and signing every pleading and

discovery paper for this case. Mad Catz argues that actual prejudice exists because

the current protective order effectively disqualifies Mr. Peterson as Mad Catz’s lead

trial attorney, leaving Mad Catz with only one, less experienced, litigator to analyze,

prepare, and present this complex patent case for trial or settlement.

According to Mad Catz, Razer marked approximately 84% of its documents as “highly 3

confidential” in this litigation. (ECF No. 40 at 11.)

Conception is the “formation, in the mind of the inventor, of a definite and permanent idea of 4

a complete and operative invention.” Solvay S.A. v. Honeywell Int’l Inc., 742 F.3d 998, 1000 (Fed.

Cir. 2014). Reduction to practice is when the inventor has constructed an embodiment of the invention

and the inventor has determined that the invention works for its intended purpose. See Cooper v.

Goldfarb, 154 F.3d 1321, 1327 (Fed. Cir. 1998).

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 The Court is persuaded that the current protective order effectively

disqualifies Mad Catz’s lead trial attorney, and under the facts of this case, impairs

Mad Catz’s prosecution if its claims and its defense against Razer’s claims. Here,

in contrast with the cases cited by Razer, there is no evidence in the record that Mad

Catz has outside litigation counsel who is already familiar with its patents and

technology. Instead, the record shows that Mad Catz maintains a two-person in5

house patent litigation team only. This team is maintained, in part, to keep legal

costs down. (ECF No. 35-1 at 14.) This team is comprised of Mr. Peterson and Mr.

Marshall only. 

Further, Mad Catz selected Mr. Peterson to serve as its lead trial counsel for

all its litigation matters. (ECF No. 35-2 ¶15.) Mr. Peterson has twenty-four years

of substantial experience litigating cases, including trying five cases to verdict. 

(ECF No. 40 at 8.) Mr. Peterson is assisted by Mr. Marshall, who is the only other

in-house litigator for Mad Catz who assists with patent litigation matters. The

record does not reflect that Mr. Marshall has comparable experience as a trial

attorney. 

Razer cites Carpenter Technology Corp. v. ARMCO, Inc., 132 F.R.D. 24

(E.D. Pa. 1990), for example, in support of its argument that Mr. Marshall, who

already has access to the protected documents, will provide adequate representation

for Mad Catz. In Carpenter, the Court denied the corporation’s Director of Law

(functionally the general counsel for the corporation) access to documents while

granting access to a senior staff attorney who was also in-house counsel for the

corporation. However, the Court found the staff attorney to be sufficient because

For example, in Brown Bag, at the time of the motion to amend the protective order, Plaintiff 5

Brown Bag Software did not have outside counsel. However, the Court noted that Plaintiff Brown Bag

previously had outside counsel and that “Brown Bag’s former outside counsel had already had over

six months in which to study the trade secrets. Brown Bag knew of the court-ordered deadline for

summary judgment motions, and had ample time to develop any admissible evidence it could from the

trade secrets divulged to it.” Brown Bag, 960 F.2d at 1471.

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Plaintiff also retained outside counsel. Id. at 28. In contrast here, Mad Catz does

not have, nor is it planning on retaining, outside counsel. 

Unlike the senior staff attorney that oversaw outside counsel’s work in the

Carpenter litigation, Mr. Marshall would be actively handling all aspects of this

complex litigation, often without meaningful assistance on critical matters. For

example, Mr. Marshall would be precluded from seeking strategic advice or motion

drafting assistance from Mr. Peterson regarding Mad Catz’s conception and

reduction to practice arguments. Mr. Marshall also likely would have to attend

every deposition to account for the possibility that under the current protective order

Mr. Peterson may be required to excuse himself from portions of the depositions

that concern information contained in protected documents. Depriving Mr. Peterson

full access to the documents in this case substantially impairs every aspect of Mad

Catz’s presentation of its case, including settlement. 

The record shows that Mr. Peterson has superior expertise in the field of

patent litigation and that Mad Catz heavily relies on Mr. Peterson in any litigation

and in settlement decisions. Razer has marked 84% of its documents as “highly

confidential,” including documents containing critical information on the

conception and reduction to practice of the keyboard technology at issue and

financial documents on Razer’s accused infringing product. In light of Mr.

Peterson’s important role in this litigation and the Court’s conclusion above that

there is little to no risk of inadvertent disclosure or irreparable harm to Razer, the

Court concludes that limiting Mr. Peterson’s access to highly confidential

documents creates an undue and unnecessary burden for Mad Catz in this case. 

Plaintiff Mad Catz will continue to suffer actual prejudice until its lead trial counsel,

Mr. Peterson, is provided full access to the highly confidential information

produced in this litigation. Thus, having carefully considered and balanced the

parties’ interests, Defendant Razer has not shown good cause exists to restrict Mr.

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Peterson’s access to highly confidential information produced for purposes of this

litigation.

III. Conclusion

For the foregoing reasons, the Court hereby GRANTS Plaintiff’s Motion to

Modify the Protective Order (ECF No. 35). The parties shall submit a joint motion

with a proposed amended protective order on or before August 29, 2014. Further,

Whitney E. Peterson shall enter his appearance for this case with the CM/ECF

system as soon as practicable.

DATED: August 19, 2014

JILL L. BURKHARDT

United States Magistrate Judge

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