Court Opinion

ID: 3190311
Source: CourtListenerOpinion
Date Created: 2016-03-31 15:00:59.583522+00
Date Added: 2024-06-11T07:39:05.990826
License: Public Domain

United States Court of Appeals
                           For the Eighth Circuit
                       ___________________________

                               No. 14-3434
                       ___________________________

                           Andover Healthcare, Inc.,

                     lllllllllllllllllllllPetitioner - Appellant,

                                         v.

                                  3M Company,

                     lllllllllllllllllllllRespondent - Appellee.
                                     ____________

                   Appeal from United States District Court
                  for the District of Minnesota - Minneapolis
                                 ____________

                          Submitted: October 22, 2015
                             Filed: March 31, 2016
                                 ____________

Before LOKEN, MURPHY, and COLLOTON, Circuit Judges.
                           ____________

COLLOTON, Circuit Judge.

     Andover Healthcare, Inc., appeals an order of the district court1 denying
Andover’s petition under 28 U.S.C. § 1782 for discovery to be used in a patent-

      1
       The Honorable Susan Richard Nelson, United States District Judge for the
District of Minnesota.
infringement suit in Germany. We conclude that the district court did not abuse its
discretion, and we therefore affirm the order.

                                            I.

       Andover Healthcare, Inc., and 3M Company both make cohesive, latex-free
bandages. Andover holds patents on its bandages in both the United States and
Europe. In 2013, Andover filed a patent-infringement suit in the District of
Delaware, alleging that 3M had infringed Andover’s patent with its line of Coban
bandages. Andover also sued 3M in Germany, asserting that 3M violated Andover’s
related European patent. This appeal concerns an effort to discover information for
use in the German suit.

        Claim one of Andover’s European patent describes “a cohesive product
comprising . . . an inherently crystalline elastomer and at least one tackifying agent
in an amount effective to disrupt the crystalline structure of the elastomer and
maintain the elastomer in a partial polycrystalline state.” In support of its defense in
the German case, 3M submitted an expert report stating that 3M’s raw “elastomer
materials are not present in a crystalline . . . state.” The report further observed that
“[s]ince no crystallinity could be detected in the elastomer right from the beginning,
it can therefore not be disrupted by specifically adding tackifiers.” 3M argued before
the German court that because its polychloroprene elastomer material is not
crystalline or maintained in a partial polycrystalline state, its products did not infringe
Andover’s European patent.

      Andover believes that 3M’s test results cannot be correct and seeks to conduct
its own testing on 3M’s polychloroprene and 3M’s polychloroprene and tackifying
agent mixture. 3M has refused, however, to reveal to Andover its specific type of
polychloroprene or its formula for making the bandages. 3M asserts that this
information implicates highly sensitive trade secrets.

                                           -2-
       3M did disclose the disputed information, under a protective order, in the
Delaware infringement suit. Andover first sought permission from the Delaware
court to use the information in the parallel German proceeding. The Delaware court
denied Andover’s request, citing the sensitivity of the information and the availability
of other mechanisms in Germany and in the United States to obtain the information.
Andover then sought the same discovery from the German court, but the German
court has not yet ruled on the request. While pursuing these discovery requests,
Andover also conducted testing on 3M’s commercially available bandages, but
Andover asserts that these tests on the final product are insufficient to make the
necessary comparison with 3M’s test results on its own raw materials.

       In a third attempt to obtain the desired information for use in Germany,
Andover petitioned the district court in Minnesota for discovery under 28 U.S.C.
§ 1782. Andover made two specific requests. First, Andover sought “[d]ocuments
sufficient to show the ingredients in, formulation of, and method of making the
products accused of infringement in Germany.” Second, Andover requested
“[d]ocuments referencing the crystallization or crystallinity properties of the
polychloroprene used in the products accused of infringement.” The district court,
affirming the order of a magistrate judge, denied Andover’s petition for discovery.
Andover appeals, and we review the district court’s decision for abuse of discretion.
Gov’t of Ghana v. ProEnergy Servs., LLC, 677 F.3d 340, 343 (8th Cir. 2012).

                                           II.

       Section 1782 provides that a district court “may order [a person] . . . to produce
a document or other thing for use in a proceeding in a foreign or international
tribunal.” 28 U.S.C. § 1782(a). The district court’s authority to order production is
not limited “to materials that could be discovered in the foreign jurisdiction if the
materials were located there.” Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S.
241, 260 (2004). The Supreme Court has issued no supervisory rules governing

                                          -3-
§ 1782(a), but has noted several factors that bear consideration in making the
determination whether to grant an application. Id. at 264-65.

       The district court considered Andover’s petition in light of the considerations
identified by the Supreme Court and concluded that three considerations weighed
against an order of production. Andover disputes the district court’s analysis and
asserts that all of the pertinent factors favor an order of production.

        The district court first observed that 3M is a party to the parallel German
infringement suit and that the German court had said it would grant Andover’s
discovery request if necessary to resolve the case. The district court’s view that this
factor weighed against the petition is well grounded in the Supreme Court’s guidance
from Intel: “[W]hen the person from whom discovery is sought is a participant in the
foreign proceeding . . . , the need for § 1782(a) aid generally is not as apparent as it
ordinarily is when evidence is sought from a nonparticipant in the matter arising
abroad. A foreign tribunal has jurisdiction over those appearing before it, and can
itself order them to produce evidence.” Id. at 264 (emphasis added).

       Andover contends that whether the German court will order discovery is
uncertain, especially if the standard is one of “necessity,” so 3M’s status as a party
in the German litigation should not weigh against an order for discovery under
§ 1782(a). We see no flaw in the district court’s approach. The court’s finding that
the German court will order discovery from 3M if necessary was based on a
declaration of German counsel for 3M, and the presence of conflicting evidence does
not make the finding clearly erroneous. It was reasonable on this record for the
district court to presume that the German court will examine first whether the case
can be resolved without compelling discovery of sensitive trade secrets, but will
exercise jurisdiction to order disclosure if the information is essential to making an
informed decision. That this approach is more circumspect than American discovery
does not dictate an order for discovery under § 1782(a). When a foreign court “can

                                          -4-
itself order” production, Intel teaches that the district court properly may deem the
need for § 1782(a) discovery less “apparent.” Id.

       The district court also determined that the “highly sensitive nature of the
requested discovery, and the lack of certainty that its confidentiality can be
maintained,” weighed heavily against ordering discovery. This reasoning aligns with
the Court’s observation in Intel that “unduly intrusive or burdensome requests may
be rejected or trimmed.” Id. at 265. The district court cited evidence that disclosure
of 3M’s trade secrets, even if limited to one ingredient of the disputed product, would
irreparably harm the company. The court also relied on a declaration from German
counsel that there is no firm procedure in Germany to prevent disclosure to in-house
counsel for Andover, that interested third parties may have access to the full case file,
and that German courts do not frequently grant requests to exclude confidential
information from their decisions. Andover suggests that a protective order could
alleviate these concerns, but any order would have to permit disclosure to the German
court at a minimum, thus leaving 3M’s trade secrets at the mercy of German
procedures that are unfamiliar to this court. Especially when 3M is a party to the
German proceeding, where the German court can determine the need for discovery
of the trade secrets and its ability to protect them, the district court properly weighed
the sensitive nature of the information sought against an order for discovery.

      As a third factor counseling against the discovery, the district court cited
Andover’s apparent attempt to avoid or preempt an unfavorable decision on discovery
by the German court. While the Supreme Court in Intel rejected a foreign
discoverability requirement, the Court allowed that considerations of comity may
guide the exercise of discretion in a particular case. Id. at 261. Andover, however,
disputes the district court’s characterization of its intent. The company
maintains—citing an uncontradicted declaration of counsel that the evidence sought
would be “fully admissible” in Germany—that German courts are very receptive to
the use of information obtained in the United States.

                                          -5-
       We are not convinced that a discovery order would be unwelcome by the
German court or would implicate the Supreme Court’s concern about efforts to
“circumvent foreign proof-gathering restrictions” of the type that prohibit the use of
certain materials. Intel, 542 U.S. at 265; see Mees v. Buiter, 793 F.3d 291, 303 n.20
(2d Cir. 2015). But even if these considerations do not militate against a discovery
order, they fail to weigh heavily enough in favor of discovery to overcome the
principal factors supporting the district court’s denial of Andover’s petition. The
German court is in a position to order the requested discovery if the information is
needed, and the German court is best positioned to assess whether any disclosure can
be accomplished without jeopardizing the sensitive trade secrets involved.

     For these reasons, the district court did not abuse its discretion in denying
Andover’s § 1782 petition. The order of October 6, 2014, is affirmed.
                     ______________________________

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