IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF OREGON 

CAPSUGEL BELGIUM NV and 

CAPSUGEL US, LLC, 

Plaintiff, 

V. 

BRIGHT PHARMA CAPS, INC., JC 

BRIGHT M LTD., JC BIO-TECH CO 

LTD., and KARL CAO, 

Defendants. 

PAP AK, Magistrate Judge: 

3:15-cv-321-l>K 

OPINION AND ORDER 

Plaintiff Capsugel Belgium NV filed this action against Defendant Bright Pharma Caps, 

Inc. ("Bright Pharma") on February 24, 2015 (#1). On July 6, 2015, Capsugel Belgium NV filed 

an Amended Complaint (#19) joining Capsugel US, LLC (collectively with Capsugel Belgium 

NV, "Capsugel") as a plaintiff and JC Bright M Ltd. ("JC Bright"), JC Bio-Tech Co. Ltd. ("JC 

Bio"), and Karl Cao as defendants. Capsugel's Amended Complaint asserts claims under 

Oregon and federal law for false advertising, unfair competition, and patent infringement. All of 

Capsugel's claims arise from or relate to Defendants' production, marketing, and sale of BrightPoly capsules. 

The current discovery dispute arises from Capsugel's Motion to Compel (#40) 

Defendants to disclose the identities of third-parties suppliers that provide the ingredients 

Defendants use to make Bright-Poly capsules (the "supplier identities"). Capsugel argues that 

Defendants' inadequate discovery responses have rendered Capsugel unable to determine the 

OPINION AND ORDER Page I 1 
ingredients and processes used to make Bright-Poly capsules and that Capsugel will only be able 

to fairly litigate its claims if Defendants disclose the supplier identities. Defendants oppose 

Capsugel's motion, arguing the supplier identities are only marginally relevant and constitute 

highly valuable trade secrets, the disclosure of which would place Defendants at a competitive 

disadvantage. In the alternative, Defendants move the court for a thirty-day extension of time to 

reply to Capsugel' s discovery requests if the court grants Capsugel' s Motion to Compel. 

The parties seek a ruling on this issue as soon as possible to prepare for the deposition of 

Defendant Cao. See Joint Notice Re ' Supplier' Issues 1 (#52). For the reasons provided below, 

Capsugel's Motion to Compel (#40) is granted. 

FACTUALANDPROCEDURALBACKGROUND 

The parties to this case are involved in the manufacture and distribution of empty pill 

capsules. Plaintiff Capsugel is "the world's leading provider of empty, two-piece hard capsules." 

Am. Compl. 3. Bright Pharma is an Oregon corporation that sells Bright-Poly capsules, which 

are the pullulan-based two-piece capsules at issue in this case. JC Bio and JC Bright supply 

Bright-Polly capsules to Bright Pharma. Bright-Poly capsules compete with Capsugel's 

J 

pullulan-based capsules. Cao controls the content of Bright Pharma's webpage. 

Capsugel alleges that Bright-Poly capsules infringe upon Capsugel's patents. Capsugel 

further alleges that the organic line of Bright-Poly capsules contains the synthetic substance 

sodium lauryl sulfate ("SLS"). Capsugel contends Defendants intentionally misrepresent the 

contents of Organic Bright-Poly capsules by labeling them "organic" and by advertising them as 

containing " [o]nly three ingredients . . . NOP Certified Non GMO pullulan, Purified water, [and] 

Carrageenan from sea weed." See First Am. Compl. ~~ 64-65; Mot. to Compel6-7. 

OPINION AND ORDER Page I 2 
The parties agree that SLS is a synthetic ingredient that cannot be added during the 

processing or handling of organic products.- Answer to Am. Compl. ~~ 44-46 (#27). Capsugel 

purports to have performed tests on Organic Bright-Poly capsules, the results of which revealed 

the presence of SLS. Mot. to Compel 6. Bright Pharma admits that SLS is sprayed on nonorganic Bright-Poly capsules after the capsules are fabricated, but denies that Organic BrightPoly capsules contain SLS. Answer to Am. Compl. ~~ 37-38, 148; Tran Decl. Ex. A at 5 (#41-

1 ). 

On May 22, 2015, this court entered a detailed Stipulated Protective Order (#12) to 

facilitate the discovery of confidential information in this case, including trade secrets. The 

order provides for three levels of confidentiality: Confidential, Confidential-Attorneys' Eyes 

Only, and Confidential-Outside Attorneys' Eyes Only. See Prot. Order 1. 

Capsugel served Defendants with requests for production on April3, 2015, June 2, 2015, 

and August 12, 2015. See Heuser Decl. Ex. A at 11-13, 20-21 , 34-35 (#39-1). Capsugel's first 

set of requests for production sought documentation of all of the ingredients and processes used 

to make Bright-Poly capsules. See, e.g. , Heuser Decl. Ex. A at 4 (#39-1). 1 

In responding to Capsugel's requests for production, Defendants produced documents 

purporting to show all of the ingredients and processes used to make Bright-Poly capsules but 

redacted the supplier identities from those documents. Capsugel contested those redactions and 

1 Contrary to Defendants' contentions, several of these requests were sufficiently broad to encompass 

the supplier identities. See Heuser Decl. Ex. A at 3, 4, 31 {#39-1) ("REQUEST FOR PRODUCTION NO. 1: All 

contracts, agreements, or understandings, formal or informal, between (or including as parties) BPC and 

JCB .... REQUEST FOR PRODUCTION N0.2: All contracts, agreements, or understandings, formal or 

informal, between (or including as parties) BPC and JCB China . ... REQUEST FOR PRODUCTION NO. 6; 

All contracts, agreements, or understandings, formal or informal, between (or including as parties) JCB 

and JCB China ... . REQUEST FOR PRODUCTION NO. 86: All documents and emails related to any BrightPoly capsules (including samples) made, used, offered for sale, or sold in the United States and/or 

imported or otherwise shipped or transported into the United States by or for Defendant Karl Cao."). 

OPINION AND ORDER Page I 3 
several other alleged deficiencies in Defendants' discovery responses in an August 12, 2015 

email to the court. The court heard telephonic oral arguments concerning those discovery 

disputes on August 20, 2015. The court then entered a Minute Order (#35) construing 

Capsugel's August 12 email as a formal Motion to Compel and resolving the majority of the 

parties' discovery disputes. The court's Minute Order did not resolve the issue whether 

Defendants are entitled to withhold the supplier identities. The court instructed the parties to 

submit supplemental briefing on that issue by August 27, 2015. The parties' timely submitted 

additional briefing, and the issue is now ready for resolution. 2 

LEGAL STANDARDS 

I. Permissible Scope of Discovery 

Parties may obtain discovery "regarding any nonprivileged matter that is relevant to any 

party's claim or defense." Fed. R. Civ. Pro. 26(b)(1). Information is relevant if it has a tendency 

to make any fact of consequence more or less probable that it would be without the information. 

Fed. R. Evid. 401. "Relevant information need not be admissible at the trial if the discovery 

appears reasonably calculated to lead to the discovery of admissible evidence." Fed. R. Civ. P. 

26(b)(1). 

II. Motion to Compel 

Federal Civil Procedure Rule 37(a)(3)(B) empowers a propounding party to "move for an 

order compelling an an~wer, designation, production, or inspection" if: 

(i) a deponent fails to answer a question asked under Rule 30 or 31; 

(ii) a corporation or other entity fails to make a designation under Rule 30(b)(6) or 

31(a)(4); 

(iii) a party fails to answer an interrogatory submitted under Rule 33; or 

2 Defendants' brief was captioned as a Motion for a Protective Order (#37). On September 14, 2015, the 

parties filed a "Joint Notice Re 'Supplier' Issue Reserved at August 20, 2015 Hearing" (#52) clarifying that 

both Capsugel's Motion to Compel and Defendants' Motion for a Protective Order should be construed 

as formal briefing on the supplier issue and not new motions raising additional issues. 

OPINION AND ORDER Page I 4 
(iv) a party fails to respond that inspection will be permitted--or fails to permit 

inspection--as requested under Rule 34. 

Rule 37(a)(4) provides that "an evasive or incomplete disclosure, answer, or 

response must be treated as a failure to disclose, answer, or respond." Rule 26 provides 

that "[f]or good cause, the court may order discovery of any matter relevant to the subject 

matter involved in the action." Fed. R. Civ. Pro. 26(b)(1). 

III. Discovery of Trade Secrets, Generally 

Courts within the Ninth Circuit generally follow a three-step burden-shifting approach in 

determining whether to compel disclosure of trade secrets. See, e.g., Todd v. Tempur-Sealy Int'l, 

Inc., No. 13-CV-04984JST (MEJ), 2015 WL 433481 , at *2 (N.D. Cal. Feb. 2, 2015). At the first 

step, the party resisting disclosure bears the burden of establishing that the information sought is 

a trade secret and that disclosure may be harmful. Trevino v. ACB Am., Inc. , 232 F.R.D. 612, 

617 (N.D. Cal. 2006) (citation and internal quotation marks omitted). If the resisting party 

makes this showing, the burden shifts to the party seeking disclosure to show that the trade 

secrets are both relevant and necessary to the proper presentation of a claim or defense. See, e.g., 

Hartley Pen Co. v. US. Dist. Court, 287 F.2d 324, 331 (9th Cir. 1961); see also Trevino, 232 

F .R.D. at 617 ("The burden then shifts to the party seeking the discovery to demonstrate that the 

information is relevant and necessary to prepare the case for trial." (citation and internal 

quotation marks omitted)). 

At the third and final step of the analysis, the court must "weigh the risk of disclosure of 

the trade secret to unauthorized parties with the risk that a protective order will impede 

prosecution or defense ofthe claims." Todd, 2015 WL 433481 , at *2 (citation omitted). "Once 

the moving party has established relevance and necessity, the discovery is virtually always 

ordered." !d. (citations and internal quotations omitted). 

OPINION AND ORDER Page I 5 
ANALYSIS 

The parties do not dispute that the supplier identities constitute trade secrets, the 

disclosure of which could be hannful. See Prot. Order 1. The issue before the court is whether 

disclosure of the supplier identities is nevertheless warranted. Therefore, the first issue the court 

must resolve is whether Capsugel has shown that the supplier identities are both "relevant and 

necessary to the proper presentation" of a claim or defense. Hartley Pen Co., 287 F.2d at 331. 

The court must then determine whether the risk of disclosure of the trade secret to unauthorized 

parties outweighs the risk that nondisclosure would impede Capsugel' s ability to litigate its 

claims. See Todd, 2015 WL 433481, at *2 (citations and internal quotations omitted). For the 

reasons provided below, I find that the supplier identities are both relevant and necessary and 

that there is not a significant risk of disclosure to unauthorized parties. I therefore grant 

Capsugel's Motion to Compel (#40). 

I. Relevancy and Necessity 

I analyze relevance with respect to each ofCapsugel's claims separately. Following the 

relevancy analysis, I discuss necessity with respect to all claims. 

A. False Advertising and Unfair Competition 

Capsugel argues that Defendants have failed to provide adequate documentation of the 

ingredients and processes used to make Bright-Poly capsules. See Mot. to Compel2. As a 

result, Capsugel argues, "Complete disclosure of information about all 'ingredients' used by 

Defendants, including suppliers, product names, lot numbers, supplier certificates of analysis, 

. and even samples is required to fairly litigate Defendants' misrepresentations and knowledge or 

state of mind regarding what is in their capsules." Mot. to Compel 7. In essence, Capsugel 

contends that only by identifying the suppliers will it be able to determine how SLS came to be 

OPINION AND ORDER Page I 6 
included in the organic capsules, whether Defendants knew about its inclusion, and whether 

there are any other ingredients in the capsules that render Defendants' advertising misleading. 

Defendants argue that Capsugel has not shown why the supplier identities are relevant or 

necessary. Mot. for Protective Order 2,6 (#37). According to Defendants, "The only plausible 

reason Capsugel wants the supplier information is to leverage JC Bio-Tech's contacts for 

commercial advantage, a purpose that has nothing to do with the allegations in this lawsuit." 

Mot. for Protective Order 5. 

I find Capsugel has shown the supplier identities are relevant to the proper presentation of 

the following three aspects of its false advertising and unfair competition claims: (1 ) Capsugel's 

ability to assert a claim for false advertising and unfair competition under Oregon law, (2) 

Defendants' liability for false advertising and unfair competition, and (3) the appropriate 

measure of damages. 

B. Patent Infringement Claims 

Capsugel asserts four patent infringement claims in Counts Three through Six of its First 

Amended Complaint. See First Am. Compl. 20-24. Counts Three and Four require Capsugel to 

prove that the allegedly infringing capsules are made with certain ingredients. See Mot. to 

Compel 8, 9. Capsugel argues that the supplier identities are relevant and necessary to its 

presentation of those claims because testing of Defendants' capsules revealed the presence of 

some infringing ingredients but Defendants nevertheless deny that those ingredients are in their 

capsules. See Mot. to Compel 8. Therefore, Capsugel argues, "Complete disclosure of 

information about all ingredients and processes used by Defendants, including ingredient 

suppliers, product names, lot numbers, supplier certificates of analysis, and even samples are 

required to fairly litigate Defendants' denials .... " Mot. to Compel 8. 

OPINION AND ORDER Page I 7 
Capsugel further argues that Defendants' ambiguous discovery responses make the 

supplier identities relevant and necessary to its presentation of its patent claims. For example, 

some of Capsugel' s infringement claims require the infringing product to contain kappa 

carrageenan. Mot. to Compel 9. While Defendants have publicly disclosed that their capsules 

contain "carrageenan from sea weed" and "sea weed extract powder," Capsugel argues that those 

disclosures are inadequate because they fail to identify the specific type of carrageenan 

Defendants' capsules contain. Mot. to Compel 9. Capsugel has presented evidence that there are 

at least three types of carrageenan that could be used to make Bright-Poly capsules. See Tran 

Decl. Ex. Bat 2 (#41-2). In response to Capsugel's requests for admissions, Bright Pharma 

stated that it lacks sufficient information to determine whether its capsules contain kappa 

carrageen. See Tran Decl. Ex. A at 4. Therefore, Capsugel argues, Defendants must disclose the 

supplier identities so Capsugel can determine whether Defendants' capsules contain kappa 

carrageenan. 

Capsugel also argues that the supplier identities are relevant and necessary to prepare and 

present its claim that Defendants' infringement was willful. See Mot. to Compel 8. 

Defendants argue that because Capsugel is a direct business competitor, disclosure of the 

supplier identities would unfairly disadvantage Defendants. Mot. for Protective Order 2. 

Defendants hypothesize that if it were required to disclose the supplier identities, Capsugel could 

learn of the supplier's identities, "such as by a missent email or the like," and could "easily 

leverage these contacts ... and potentially push Defendants out of the supply chain altogether." 

Mot. for Protective Order 5-6. Defendants further argue that "Capsugel has failed to articulate 

relevance and necessity with any reasonable particularity, and . . . [ e ]ven if Capsugel 

OPINION AND ORDER Page I 8 
demonstrates some limited relevance and necessity of this information, the burden upon 

Defendants still outweighs any benefit to Capsugel." Mot. for Protective Order 7. 

I reject Defendants' argument that disclosure of the supplier identities would unfairly 

disadvantage Defendants. As discussed in detail below, the Stipulated Protective Order currently 

in place in this matter sufficiently accounts for that concern. I also reject Defendants' argument 

that Capsugel has failed to articulate with sufficient particularity that the supplier identities are 

relevant and necessary. Defendants cite two cases in support of that argument, Phillips ex rei. 

Estates of Byrd v. Gen. Motors Corp., 307 F.3d 1206 (9th Cir. 2002) and Cabell v. Zorro 

Productions, Inc., 294 F.R.D. 604 (W.D. Wash. 2013). Mot. for Protective Order 7. Both cases 

are inapposite. Phillips merely established that in ruling on a motion for a protective order, the 

trial court must expressly consider whether the movant has shown good cause, regardless of the 

movant's proffered justification for the order. 307 F .3d at 1210-12. 

The Cabello court held that "[w]here the relevance ofthe requested information is low, 

avoiding the harm that comes with the burden of overbroad discovery constitutes good cause for 

a protective order." 294 F.R.D. at 609 (citation and internal quotation marks omitted). 

However, the "burden of overbroad discovery" that the court was considering in that case was 

the expenditure of substantial amounts of time and money to produce a bevy of documents. See 

id. This case is easily distinguishable, as the requested information is readily available to 

Defendants and would not require an arduous document production. 

I agree that the supplier identities are relevant to whether Bright-Poly capsules contain 

infringing ingredients, and if so, whether Defendants' infringement was willful. Therefore, the 

supplier identities are relevant to Capsugel' s patent infringement claims. 

OPINION AND ORDER Page I 9 
C. Necessity 

Bright Pharma's assertion that none of the capsules contain SLS is difficult to reconcile 

with its admission that the non-organic capsules are sprayed with SLS and with the test results 

showing the presence of SLS in the organic capsules. In light of Defendants' inadequate 

discovery responses, Capsugel will only be able to prepare and present its claims if it acquires 

the supplier identities. 

Furthermore, Defendants pleaded as an affirmative defense that Organic Bright-Poly 

capsules do not contain SLS. Answer to Am. Compl. ~ 148. Capsugel will not be able to 

adequately contest that defense if it is unable to confirm the results of its testing showing that the 

organic capsules contain SLS. Therefore, discovery ofthe supplier identities is necessary. See 

Bare Escentuals Beauty, Inc. v. Costco Wholesale Corp., No. 07CV90, 2007 WL 4357672, at *3 

(S.D. Cal. Dec. 11, 2007) (holding that Magistrate properly determined that disclosure of 

Defendant's supplier's identity was necessary where such disclosure would help Plaintiff assess 

Defendant's affrrmati ve defense). 

II. Balancing the Risk of Disclosure to Unauthorized Parties Against the Interest in 

Effective Presentation of Claims and Defenses 

The next issue is whether the risk of disclosure of Defendants' trade secrets to 

unauthorized parties outweighs the risk that nondisclosure would impede the proper presentation 

ofthe claims and defenses in this case. See Todd, 2015 WL 433481 , at *2 (setting forth the 

applicable legal framework for discovery of trade secrets). I find that it does not. 

As stated above, a Stipulated Protective Order (#12) has been entered in this case. That 

order provides three levels of protection, including a "Confidential-Outside Attorneys' Eyes 

Only" level. Prot. Order 1. Capsugel argues that the Stipulated Protective Order provides 

sufficient protection against disclosure of the supplier identities to unauthorized parties. See 

OPINION AND ORDER Page I 10 
Mot. to Compel4. Defendants do not directly respond to Capsugel's argument on this point, but 

instead contend that the protections afforded by the Stipulated Protective Order are irrelevant to 

whether it must disclose the supplier identities because Capsugel has failed to carry its burden of 

establishing that the information is relevant and necessary. See Mot. for Protective Order 8. 

The Stipulated Protective Order provides sufficient protection against disclosure to 

unauthorized parties. At least one court within the Ninth Circuit has found that a protective 

order less restrictive than the one in place in this matter is sufficient to tip the balance of interests 

in favor of ordering disclosure of confidential supplier identities. See Bare Escentuals Beauty, 

2007 WL 4357672, at *4 (fmding sufficient an Attorneys' Eyes Only protective order). 

Furthermore, several well-reasoned opinions from trial courts outside the Ninth Circuit 

provide persuasive authority for the proposition that the Stipulated Protective Order in this case 

provides sufficient protection against disclosure to unauthorized parties. See, e.g. , Taiyo Int'l, 

Inc. v. Phyto Tech Corp. , 275 F.R.D. 497, 501 (D. Minn. 2011) ("Where the parties have agreed 

to a protective order, particularly one with 'Attorneys' Eyes Only' designation, even a very 

sensitive trade secret will be sufficiently protected and should be produced if relevant." (citations 

omitted)); Coca-Cola Bottling Co. of Shreveport v. Coca-Cola Co. , 107 F.R.D. 288, 298-99 (D. 

Del. 1985) ("The potential harm that would come from public disclosure of the formulae for old 

Coke, new Coke, diet Coke, and caffeine free Coke is great, but virtually all of that harm can be 

eliminated with stringent protective orders and other safeguards." (citation omitted)); see also 

Apple, Inc. v. Samsung Elecs. Co., No. C 11-1846 LHK PSG, 2012 WL 5878392, *2 (N.D. Cal. 

Nov. 21 , 2012); Bd. ofTrustees of Leland Stanford Junior Univ. v. Tyco Int'l Ltd. , 253 F.R.D. 

521 , 523 (C.D. Cal. 2008). 

OPINION AND ORDER Page I 11 
, Defendants do not argue that an Outside Attorneys' Eyes Only protective order is 

insufficient to protect against the risk of disclosure to unauthorized parties. Instead, Defendants 

rely entirely on their argument that Capsugel has not carried its burden of showing that the 

supplier identities are relevant and necessary. See Mot. for Protective Order 8. However, as 

detailed above, I have already rejected that argument. Consequently, I find that the risk of 

disclosure to unauthorized parties does not outweigh the risk that nondisclosure would impede 

the proper presentation of the claims and defenses in this case. 

CONCLUSION 

For the reasons provided above, Capsugel's Motion to Compel (#40) is GRANTED and 

Defendants are ORDERED to produce the supplier identities, product names, lot numbers, 

supplier certificates of analysis, and product samples. 

Defendants move the court for a thirty-day extension oftime to produce the supplier 

identities in the event Capsugel's Motion is granted. Mot. for Protective Order 9 (#37). Given 

the Defendants' apparent ability to easily produce the supplier identities, Defendants' Motion for 

an Extension of Time is DENIED and Defendants are ORDERED to produce the information 

subject to Plaintiffs Motion to Compel within fourteen (14) days ofthe date ofthis order. 

Dated this 28th day of September, 2015. 

Honorable Paul Pap 

United States Magistrate Judge 

OPINION AND ORDER Page I 12