a patent prosecution bar in a protective order reflects a balance wherein an

attorney agrees to give up a specific scope of activities for the specific duration of

the bar in exchange for access to certain confidential information. As Judge

Moran aptly put it: ‘It’s a choice. ... [A] party . . . has a choice to say, okay, I am

going to use this attorney as part of my litigation team. Or I am going to use this

attorney as part of my patent application team. But you can’t do both.’
Id.

Thus, the prosecution bar provides a choice. An individual subject to the bar is not
disqualified from viewing highly confidential information: if the individual elects to forego
certain prosecution activities for the specified duration, that individual may review highly
confidential information. If the individual chooses not to forego the prosecution activities, then
that individual may not review highly confidential information. If Mr. Bakos is willing to forego
the prosecution activities that are proscribed if he views Highly Confidential or Highly
Confidential-Source Code information, then Allstate is entitled to show him that information.

Here, as in the Trading Technologies case, “[d]efendants have not pointed out any case,
nor have we found one, where an absolute bar against an [individual’s] access to a wide range of
confidential information in a protective order was held to ‘reasonably reflect the risk presented
by the disclosure of proprietary competitive information.” Trading Techs., 2011 WL 148252, at
*8 (quoting In re Deutsche Bank Trust Co. Americas, 605 F.3d 1373, 1381 (7th Cir. 2010)).
And, as the court in Telular Corp. v. Vox2, Inc., No. 00 C 6144, 2001 WL 641188, at *2 (N.D.
Ill. June 4, 2001), we “ha[v]e no reason to question [Mr. Bakos’s] candor in agreeing to be
bound by the protective order and to only use confidential material disclosed to him in the
present litigation.”

Nationwide suggests that we should give less weight to Mr. Bakos’s representations than

we would give to those of an attorney (see Defs.’ Reply at 9-10). We find this argument

unpersuasive. Under the protective order, an expert such as Mr. Bakos must take a step before


provide assistance in responding to an Office Action related to the pending patent applications

identified in Paragraphs 7(c) and (d) of his declaration.

SIDNEY I-SCHENKIER
United States Magistrate Judge

Dated: June 28, 2013

10


a party from exercising that choice absent a showing of good cause. Nationwide has failed to
make that showing.”
Ill.

Nationwide contends that the risk of Mr. Bakos violating the protective order is
particularly heightened because he is currently involved in activities that would violate the
prosecution bar in the protective order, including ongoing prosecution of his own pending patent
applications (Defs.’ Reply at 3). Specifically, Mr. Bakos is listed as a co-inventor on two
pending patent applications — an unpublished application entitled “System and Method for
Providing a Guarantee within a Deferred Annuity for Insuring a Security” and a published
application entitled “System and Method for Determining a Premium for Insurance for a
Security” (Bakos Decl. at § 7). However, Mr. Bakos states that he is “not currently engaged in
any patent prosecution activities relating to these applications,” and that he has assigned away
his rights in these applications and has no financial interests in them (Jd. at {§ 9-10). Mr. Bakos
also states that “[i]n the future, it is possible that [he] could be asked to provide assistance in
responding to an Office Action, such as, for example, providing a declaration attesting to certain
facts” concerning the pending applications (/d. at 4 9).

At the threshold, Nationwide’s argument turns on whether Mr. Bakos’s work on these
pending patent applications would fall within the prosecution bar that applies to one who views
Highly Confidential or Highly Confidential-Source code information — that is, whether the

pending patent applications “relat[e] to the claimed subject matter of the patents asserted in this

°The cases that Nationwide cites for its proposition that courts “often disqualify consultants” under
protective orders do not support this statement (Defs.’ Mem. at 14). For example, the dispute at issue in Applied
Signal Tech., Inc. v. Emerging Markets Comms., No. 09 C 2180 (DMR), 2011 WL 197811 (N.D. Cal. Jan. 20,
2011), occurred before the court entered a protective order because the parties disagreed on several issues, including
whether expert witnesses who view confidential information should be subject to a prosecution bar. The court
ultimately held that it was appropriate to apply the prosecution bar to expert witnesses.

7


viewing Highly Confidential or Highly Confidential-Source Code information that is not
required of an attorney: he must sign an undertaking in which he commits to follow the
restrictions of the protective order and submit to the jurisdiction of the Court to address any
violations of that commitment (Prot. Order at J 4(b)). To be sure, attorneys are bound by unique
ethical rules vis a vis the Court and their clients. But, Mr. Bakos faces serious professional,
practical, and legal ramifications if he does not abide by the protective order. We deem that
sufficient to deter a non-attorney such as Mr. Bakos from violating the protective order.!
Nationwide also argues that Mr. Bakos is “merely a retained consultant,” and thus
Allstate would not be disadvantaged or prejudiced if Mr. Bakos was “disqualiffied]” from
viewing Highly Confidential or Highly Confidential-Source Code information (Defs.’ Reply at
8). We disagree. While in Trading Technologies this Court found the risk of prejudice was high
because the individual at issue was the lead attorney on the case, it does not follow that there is
automatically little risk of prejudice to a party that is compelled to forego its first choice of
retained expert or consultant. At the risk of stating the obvious, we note that patent litigation
generally presents issues that involve substantial complexity. The role of an expert in assisting a
party in presenting these issues to a court and jury in an intelligent and understandable fashion
can be central to the outcome of the case. To suggest that because there are hundreds of people
in Chicago who, like Mr. Bakos, are actuaries, and that they all are fungible (Nationwide Mem.

at 2, 15), blinks this reality. A party’s choice of an expert is a critical one, and we would not bar

'To the extent that Nationwide viewed such an undertaking as insufficient to allow an expert to view
Highly Confidential or Highly Confidential-Source Code information under the prosecution bar, Nationwide could
have sought a protective order that applied the prosecution bar only to attorneys and not to “any individual” and that
categorically barred experts who engage in “prosecution” activity from seeing any Highly Confidential or Highly
Confidential-Source Code information. Nationwide did not seek a protective order that set forth such a categorical
restriction when it negotiated the protective order last fall, and it has offered no good cause for such a categorical
restriction now.


participate in proceedings “involving any patents or patent applications relating to the claimed
subject matter of the patents asserted in this action,” so long as that participation does not include
“directly or indirectly drafting, amending, advising, or otherwise affecting the scope or
maintenance of patent claims” (Prot. Order at J 11). We will not bar Mr. Bakos from viewing
Highly Confidential or Highly Confidential-Source Code information in this case on the mere
“possibility” he might provide assistance in connection with the pending applications that might
(or might not) fall within the bar.

Nevertheless, we recognize that the line that separates proscribed from permitted
prosecution activities may not have been drawn by the parties in their agreed protective order
with the clarity they now would prefer. Thus, we order that during the pendency of this case and
for two years after the conclusion of this case, Mr. Bakos must disclose to Allstate’s attorneys,
who must in turn disclose to Nationwide’s attorneys, each time Mr. Bakos is “asked to provide
assistance in responding to an Office Action,” with respect to the pending patent applications
identified in Paragraphs 7(c) and 7(d) of his declaration. That will allow the parties to have a
meaningful discussion about whether a specific action that Mr. Bakos is asked to take would
violate the bar. We view that requirement as a way to avoid disputes (after the fact) if Mr. Bakos
is called upon to provide the assistance that he envisions as “possible.”

CONCLUSION
For the foregoing reasons, Nationwide’s motion (doc. # 61) is denied, and Allstate’s

attorneys are ordered to disclose to Nationwide’s attorneys each time Mr. Bakos is asked to


UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
ALLSTATE INSURANCE )
COMPANY, )
)
Plaintiff, ) Case No. 12 C 3609
)
v. ) Magistrate Judge Sidney I. Schenkier
)
NATIONWIDE MUTUAL )
INSURANCE COMPANY, et al. )
)
Defendants. )

MEMORANDUM OPINION AND ORDER

Plaintiff, Allstate Insurance Company (“Allstate”), and Defendants, Nationwide Mutual
Insurance Company, Nationwide Mutual Fire Insurance Company, Nationwide General
Insurance Company, and Nationwide Insurance Company of America (“Nationwide”), are in the
midst of fact discovery in this patent infringement/invalidity case. Fact discovery closes on
November 14, 2013, and a claim construction hearing is set to commence on January 17, 2014
(doc. #56). The parties stipulated to a protective order, which was entered on November 9, 2012
(doc. #40: Prot. Order). The protective order contains, among other provisions, a “prosecution
bar” (dd. at § 11).

On May 3, 2013, Nationwide filed a motion asserting that pursuant to the prosecution
bar, Allstate should be barred from disclosing highly confidential information to Allstate’s
retained expert, Mr. Thomas Bakos (doc. # 61). Mr. Bakos consults on patenting in the
insurance field. He has “assisted clients with determining whether particular technologies,
processes, or concepts are potentially inventive based on [his] knowledge and expertise in the

insurance industry,” and he has “advised clients on prior art as well as the state of the art in a


action.” The parties agree that the phrase “claimed subject matter” is narrower than the phrase
“subject matter,” which governs the application of the bar that applies when one has reviewed a
pending patent application relating in any way to the subject matter of the patents asserted in this
action (see 6/11/13 Hearing Tr. at 9-11). But, they do not agree on precisely what the phrase
“claimed subject matter” encompasses.

We are skeptical that this phrase sweeps as broadly as Nationwide claims, to include
anything relating to “processing insurance claims and providing insurance” (Defs.’ Mem. at 10).
While Nationwide notes that the “relating to the subject matter of the patents-in-suit” language is
routinely used in patent prosecution bars, the cases that Nationwide cites do not assist this Court
in determining how that language — or the more narrow phrase “relating to the claimed subject
matter” — should be interpreted (Id. at 14). That said, we have concerns with Allstate’s
definition that requires the bar to be “narrowly tied” to the claimed inventions (PI.’s Opp’n at 1),
since in advance of the Markman hearing we do not know what claims are in dispute and what
their construction may be.

But, we need not resolve this dispute over the interpretation of “relating to the claimed
subject matter.” Mr. Bakos has signed the undertaking, and he represents that it is only
“possible” — not probable — that he would be called on to provide assistance on the pending
patent applications (Bakos Decl. at ¥ 9). In addition, if he is called on to provide assistance, it is
not clear if it would involve matters barred, rather than permitted, by the protective order (Prot.

Order at § 11). Recall that the protective order allows someone subject to the prosecution bar to

3See Cummins-Allison Corp. v. Glory, 02 C 7008, slip op. at 18-19 (ND. Ill. Dec. 31, 2003) (holding that
complete bar on outside patent counsel’s access to confidential information was too broad, and noting that it was
common to not further define “related to” patents in suit; Cheah IP LLC y. Plaxo, Inc., 2009 WL 1190331 (N.D.
Cal. May 4, 2009) (holding that the protective order need not “specifically define the types of materials to which any
prosecution bar should be limited”).


to the undertaking (Prot. Order at ¥ 4(d); Prot. Order, app 1). On April 2, 2013, Mr. Bakos
signed the undertaking (PI.’s Opp’n, Ex. A-2: Bakos Undertaking at 1).
Il.

As the prosecution bar applies to “any individual,” there is no dispute that the bar applies
to retained experts. Indeed, Allstate contends that because Mr. Bakos has agreed to be bound by
the terms of the protective order, he should be allowed to review Nationwide’s highly
confidential information (Pl.’s Opp’n at 5-6). In his declaration submitted with Allstate’s
opposition to Nationwide’s motion, Mr. Bakos further stated that in signing the undertaking to
the protective order, he agreed to be bound by the prosecution bar’s restriction on certain patent
prosecution activities, to use all confidential material only for purposes of this case, to not
disclose that information to anyone else, and to return or destroy the information upon request
(id., Ex. A: Bakos Decl. at f§ 2, 5). Nationwide counters that Mr. Bakos’s undertaking does not
sufficiently guard against his inadvertent misuse of confidential information now or in the future,
because no matter how “resolute or firm” Mr. Bakos is in his commitment to abide by the
protective order, he cannot compartmentalize the information he learns in this case (doc. # 72:
Defs.’ Reply at 3).

Nationwide’s argument “misunderstands the nature of a patent prosecution bar in a
protective order.” Trading Techs. v. GL, Nos. 05 C 4120, 05 C 5164, 2011 WL 148252, at *8
(N.D. Ill. Jan. 18, 2011). The patent prosecution bar presents a choice that the attorney or expert

to whom it is applied must make:


Second, the prosecution bar states that “any individual for or representing the receiving party
who has reviewed a pending patent application relating in any way to the subject matter of the
patents asserted in this action shall not be involved” in the prosecution of any non-public patent
claims pertaining to that patent application through the pendency of that patent application or
until it becomes publicly available (/d.).

Nationwide relies on the prosecution bar governing those who review Highly
Confidential or Highly Confidential-Source Code information in its effort to bar Allstate from
disclosing that kind of information to Mr. Bakos. We therefore address two other portions of the
protective order relevant to this issue.

The prosecution bar does not prevent an individual who has reviewed Highly
Confidential or Highly Confidential-Source Code information from engaging in any and all
activity in the Patent Office. Rather, the bar specifically allows one who has reviewed that
information to “advis[e] his or her clients about the content and applicability of prior art cited to
or by the Patent Office during any such proceeding[s],” and to “participat[e] in any interference,
reissue, reexamination, review or other proceeding involving any patents or patent applications
relating to the claimed subject matter of the patents asserted in this action provided their
participation does not include directly or indirectly drafting, amending, advising, or otherwise
affecting the scope or maintenance of patent claims” (Prot. Order at 4 11).

In addition, under the protective order, an expert or consultant to whom a party seeks to
disclose Confidential, Highly Confidential, or Highly Confidential-Source Code information
must first sign an “undertaking” agreeing to be bound by the Court’s protective order and

submitting to the Court’s jurisdiction for purposes of enforcing the expert’s obligations pursuant


particular insurance field” (doc. # 71: Pl.’s Opp’n to Defs.’ Mot., Ex. A: Bakos Decl. at § 3).
Mr. Bakos is a co-inventor on: (1) an unpublished, pending patent application entitled “System
and Method for Providing a Guarantee with Deferred Annuity for Insuring a Security;” (2) a
published pending patent application entitled “System and Method for Determining a Premium
for Insurance for a Security;” (3) two published patents entitled “Method and Apparatus for
Bundling Insurance Coverages in Order to Gain a Pricing Advantage;” and (4) two published
patents entitled “System and Method for Determining a Premium for Insurance for a Security”
(Id. at J 7). He has also helped draft a pending patent application relating to life insurance
products, but he is not involved in any continued prosecution of that application and has no plans
to be involved in the future (Pl.’s Opp’n at 4).

This motion was referred to this Court for decision (doc. # 70), and the motion is now
fully briefed. For the reasons that follow, we deny Nationwide’s motion.

I.

We begin with a discussion of the prosecution bar to which the parties agreed in the
protective order. The bar addresses the limitations imposed on persons who review two different
categories of information.

First, the prosecution bar states that for two years after the conclusion of the case, any
individual who has reviewed Highly Confidential or Highly Confidential-Source Code
information may not be “involved in the prosecution of patents or patent applications relating to
the claimed subject matter of the patents asserted in this action, including without limitation any
patent or application claiming priority to or otherwise related to the patents asserted in this
action” (Prot. Order at § 11). “Prosecution” is defined as “directly or indirectly drafting,

amending, advising, or otherwise affecting the scope or maintenance of patent claims” (/d.).