Court Opinion

ID: 6495696
Source: CourtListenerOpinion
Date Created: 2022-06-28 14:01:44.539594+00
Date Added: 2024-06-11T08:49:09.136109
License: Public Domain

Case: 21-2303    Document: 39     Page: 1   Filed: 06/28/2022

   United States Court of Appeals
       for the Federal Circuit
                  ______________________

                  STATIC MEDIA LLC,
                    Plaintiff-Appellee

                             v.

             LEADER ACCESSORIES LLC,
                 Defendant-Appellant

                    JEN-FENG LEE,
                         Appellant
                  ______________________

                        2021-2303
                  ______________________

    Appeal from the United States District Court for the
 Western District of Wisconsin in No. 3:18-cv-00330-wmc,
 Judge William M. Conley.
                 ______________________

                  Decided: June 28, 2022
                  ______________________

     DEBORAH CAROL MEINERS, DeWitt Ross & Stevens
 S.C., Madison, WI, argued for plaintiff-appellee. Also rep-
 resented by ELIJAH B. VAN CAMP, HARRY E. VAN CAMP.

    AARON WAYNE DAVIS, Valhalla Legal, PLLC, Custer,
 SD, argued for appellants.
                  ______________________

     Before DYK, REYNA, and TARANTO, Circuit Judges.
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 2               STATIC MEDIA LLC   v. LEADER ACCESSORIES LLC

      Opinion for the court filed by Circuit Judge DYK.
     Dissenting opinion filed by Circuit Judge REYNA.
 DYK, Circuit Judge.
      Leader Accessories LLC appeals a decision of the Dis-
 trict Court for the Western District of Wisconsin. The dis-
 trict court held Leader and its attorney, Jen-Feng Lee, in
 contempt for allegedly violating a protective order by dis-
 closing confidential documents and awarded Static Media
 LLC sanctions and attorney’s fees. We hold that the dis-
 closure was not a clear violation of the protective order and
 accordingly reverse the district court’s contempt finding
 and its award of sanctions and attorney’s fees.
                        BACKGROUND
     Static Media LLC (“Static”) sued Leader Accessories
 LLC (“Leader”) in May 2018 (“the Wisconsin action”) for
 infringing its D771,400 design patent (“D400 patent”). The
 merits of the case were resolved when the district court
 granted Leader’s motion for summary judgement of non-
 infringement, and this appeal presents no issue related to
 that decision. Rather, this appeal concerns an alleged vio-
 lation of a protective order issued by the district court.
      In September 2018, the parties entered into the protec-
 tive order, approved by the court, under which they could
 designate certain documents and information produced
 during discovery as “Confidential” or “Highly Confiden-
 tial.” The protective order’s purpose was to mitigate the
 risk of “injury or damage” and “competitive disad-
 vantage[s]” posed by “public dissemination and disclosure
 of” the confidential information. J.A. 42. To that end, con-
 fidential documents were subject to the following re-
 strictions:
     3. All Confidential information and documents,
     along with the information contained in the docu-
     ments, shall be used solely for the purpose of this
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 STATIC MEDIA LLC   v. LEADER ACCESSORIES LLC                 3

    action and no person receiving such information or
    documents shall, directly or indirectly, transfer,
    disclose or communicate in any way the infor-
    mation or the contents of the documents to any per-
    son other than those specified in paragraph 4.
 J.A. 43 (emphasis added). Paragraph 4 allowed the parties
 to disclose confidential-designated documents to a limited
 group of people, including:
    4. Access to any Confidential information or docu-
    ment shall be limited to:
    ...
    f. outside independent persons (i.e., persons not cur-
    rently or formerly employed by, consulting with or
    otherwise associated with any party) who are re-
    tained by a party or its attorneys to furnish consult-
    ing, technical or expert services and/or to give
    testimony in this action and have executed the
    “Written Assurance” as specified below.
 J.A. 44 (emphasis added). Thus, outside independent per-
 sons retained to furnish consulting, technical, or expert
 services in the Wisconsin action were also independently
 bound by the terms of the protective order because they
 were obligated to sign a separate “Written Assurance” be-
 fore receiving any confidential information:
    7. Before any person designated in 4(f) is given ac-
    cess to Confidential or Highly Confidential – Trial
    Counsels’ Eyes Only information, the individual
    shall first read this Order and, as is appropriate
    under the circumstances, either execute a “Written
    Assurance” in the form attached hereto as Exhibit
    A, acknowledge on the record that he or she has
    read and agrees to be bound by the terms of the Or-
    der and the jurisdiction of this Court for the sole
    purpose of enforcing same, or otherwise agree in
    writing to be bound by the terms of this Order and
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 4               STATIC MEDIA LLC   v. LEADER ACCESSORIES LLC

     to submit to the jurisdiction of this Court for the
     sole purpose of enforcing this Order.
 J.A. 45 (emphasis added). The Written Assurance re-
 stricted independent consultants’ use of confidential infor-
 mation:
     I shall not divulge any information or documents or
     copies of documents designated Confidential or
     Highly Confidential – Trial Counsels’ Eyes Only
     obtained pursuant to such Protective Order or the
     contents of such documents to any person other
     than those specifically authorized by the Protective
     Order. I shall not copy or use such information or
     documents except for the purposes of this action and
     pursuant to the terms of the Protective Order.
 J.A. 50–51 (emphasis added).
     Shortly after Static and Leader agreed to this protec-
 tive order in the Wisconsin action, Static sent a cease-and-
 desist letter to another party, OJ Commerce, also alleging
 infringement of the D400 patent. Upon receipt of the let-
 ter, OJ Commerce’s attorney, Sam Hecht, contacted
 Leader’s attorney, Mr. Lee, and the parties decided to enter
 into a Joint Defense Group (“JDG”) to be governed by a
 Joint Defense Agreement (“JDA”). Such an agreement is a
 useful tool to protect the confidentiality of communications
 between parties “where a joint defense effort or strategy
 has been decided upon and undertaken by the parties and
 their respective counsel.” United States v. Evans, 113 F.3d
 1457, 1467 (7th Cir. 1997) (quoting United States v.
 Schwimmer, 892 F.3d 237, 243 (2d Cir. 1989)). Both attor-
 neys testified that they understood the JDG to be “for the
 purpose of common defense . . . to promote the joint inter-
 est.” J.A. 96; J.A. 103.
     Thereafter, Static sued OJ Commerce for patent in-
 fringement in United States District Court for the South-
 ern District of Florida on January 30, 2019, (“the Florida
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 STATIC MEDIA LLC   v. LEADER ACCESSORIES LLC                 5

 action”) and the parties executed the JDA. Mr. Lee then
 sent Mr. Hecht copies of the protective order and Written
 Assurance form from the Wisconsin action. Four days after
 signing the JDA, Mr. Hecht signed and returned the Writ-
 ten Assurance to Mr. Lee. Shortly thereafter, Mr. Lee
 emailed Mr. Hecht two deposition transcripts and related
 exhibits from the Wisconsin action, including Static’s li-
 censing and royalty agreements and sales and revenue in-
 formation. Only a few of the pages in those documents
 were marked confidential pursuant to the protective order.
 The rest were not.
      In both of Mr. Lee’s email disclosures to Mr. Hecht, he
 asked him to “note the protective order re Confidential
 AEO designation” and reminded him to “please adhere to
 the protective order.” J.A. 132. Mr. Lee later testified that
 he sent the documents to Mr. Hecht for the purpose of
 “more effective joint defense consultation and discussion,”
 including “discussion and consultation” regarding Leader’s
 April 2019 motion for summary judgment in the Wisconsin
 action. J.A. 98. Mr. Lee described “the consultation with
 [Mr.] Hecht” as “more comprehensive” than Mr. Lee’s con-
 sultation with other experts, “encompassing infringement,
 invalidity, damages, and additional and assertable poten-
 tial defenses.” J.A. 99.
      Several months later, in September 2019 settlement
 negotiations between Static and OJ Commerce in the Flor-
 ida action, Mr. Hecht improperly used the royalty agree-
 ments he obtained from Mr. Lee to assess a settlement
 proposal from Static. Mr. Hecht revealed to Static’s coun-
 sel, attorney Susan Warner, who was not counsel in the
 Wisconsin action nor a claimed signatory to the protective
 order, that OJ Commerce “ha[d] a JDA with counsel [for
 Leader]” which is why he was “fully aware about the actual
 royalties [Static had] received.” J.A. 104. In describing
 this incident, Mr. Lee testified that he had “no reason to
 expect that [Mr. Hecht] would use the information in
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 6               STATIC MEDIA LLC   v. LEADER ACCESSORIES LLC

 violation of the [protective order], given that [he] had [Mr.
 Hecht] sign the Acknowledgement and gave [Mr. Hecht] re-
 peated reminders about the [protective order].” J.A. 130.
     As a result of Mr. Hecht’s actions, Static moved for dis-
 covery sanctions and an order holding Leader and its coun-
 sel in civil contempt, alleging that Mr. Lee violated the
 protective order by disclosing the confidential documents
 to Mr. Hecht. A magistrate judge found Leader and Mr.
 Lee in civil contempt for violating the protective order. The
 district court affirmed.
     Following the district court’s affirmance, the magis-
 trate judge ordered Leader to pay Static’s attorney’s fees
 and to pay Static a $1,000 sanction. The district court
 again affirmed. Leader and its counsel appeal. We have
 jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).
                         DISCUSSION
     We review the district court’s “decision to sanction and
 the choice of an appropriate sanction” under an abuse of
 discretion standard. Melendez v. Ill. Bell Tel. Co., 79 F.3d
 661, 670 (7th Cir. 1996).
     Federal Rule of Civil Procedure 37 permits district
 courts to “treat[] as contempt of court the failure to obey
 any [court] order.” Fed. R. Civ. P. 37(b)(2)(A)(vii). A con-
 tempt finding requires the moving party to “establish by
 clear and convincing evidence that (1) a court order sets
 forth an unambiguous command; (2) the alleged contemnor
 violated that command; (3) the violation was significant,
 meaning the alleged contemnor did not substantially com-
 ply with the order; and (4) the alleged contemnor failed to
 make a reasonable and diligent effort to comply.” SEC v.
 Hyatt, 621 F.3d 687, 692 (7th Cir. 2010) (citing Prima Tek
 II, LLC v. Klerk’s Plastic Indus., B.V., 525 F.3d 533, 542
 (7th Cir. 2008)). As we discuss below, the Supreme Court
 has recently clarified that a district court’s finding of
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 STATIC MEDIA LLC   v. LEADER ACCESSORIES LLC                 7

 contempt is improper when there “is [a] fair ground of
 doubt as to the wrongfulness of the [contemnor’s] conduct.”
 Taggart v. Lorenzen, 139 S. Ct. 1795, 1801–02 (2019) (quot-
 ing Cal. Artificial Stone Paving Co. v. Molitor, 113 U.S.
 609, 618 (1885)).
                               I
      Both the district court and magistrate judge’s decisions
 here appear to rest on two separate theories. We first ad-
 dress the district court’s theory that Leader and Mr. Lee
 should be held in contempt because Mr. Lee was responsi-
 ble for Mr. Hecht’s improper use of the confidential infor-
 mation in the Florida action. The magistrate judge based
 its contempt finding on the fact that Mr. Lee knew or
 should have known that Mr. Hecht would use the confiden-
 tial information for improper purposes. Its initial con-
 tempt order stated, without citing evidentiary support,
 that Mr. Hecht “made [his] intention[]” to “use[] the confi-
 dential information he received from Leader to bolster OJ
 Commerce’s defense in the Florida litigation” “clear to
 Leader’s counsel before entering the JDA.” J.A. 16. It was
 on this basis that the magistrate judge concluded it was
 “illogical, unreasonable and self-serving for Leader to con-
 tend that it [could] unilaterally disclose Static Media’s con-
 fidential information from this case to a third party,” and
 that in doing so, Leader “was at fault and . . . acted will-
 fully and in bad faith.” J.A. 16–17. When the district court
 affirmed the contempt finding, it did so in part because
 Leader and its counsel “had to know that OJ Commerce’s
 and its counsel’s principal use of the information would be
 in defending against the [Florida action].” J.A. 21.
     Leader argues that the district court abused its discre-
 tion because Static did not prove by clear and convincing
 evidence that Mr. Lee’s disclosure to Mr. Hecht violated the
 protective order. It relies on the fact that Mr. Lee did not
 disclose any confidential documents to Mr. Hecht until
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 8               STATIC MEDIA LLC   v. LEADER ACCESSORIES LLC

 after Mr. Hecht had signed the Written Assurance, under
 which he promised not to “use [the confidential] infor-
 mation or documents except for purposes of [the Wisconsin]
 action.” Appellant’s Br. 18–19 (citing J.A. 98; 106–07).
 Leader also notes that Mr. Lee reminded Mr. Hecht of the
 protective order’s obligations each time he disclosed confi-
 dential information to Mr. Hecht. Finally, Leader argues
 that there was “no evidence” to support the district court’s
 conclusion that Mr. Lee “knew that Mr. Hecht was going to
 use [the] confidential information in [the Florida action],”
 given Mr. Lee’s testimony that he had “no reason to expect
 that OJ Commerce’s counsel would use the information in
 violation of the [protective order].” Id. at 19 (citing
 J.A. 130).
     We agree that Static failed to prove by clear and con-
 vincing evidence that Leader violated the protective order
 in this respect. There is no clear and convincing eviden-
 tiary support for the magistrate judge’s and the district
 court’s respective conclusions that Mr. Lee knew or should
 have known Mr. Hecht would use the confidential infor-
 mation in the Florida action. Before disclosing the deposi-
 tion transcripts to Mr. Hecht, Mr. Lee did exactly what was
 required to ensure that Mr. Hecht would abide by the pro-
 tective order. Mr. Lee had Mr. Hecht sign the Written As-
 surance, and with each disclosure, Mr. Lee reminded Mr.
 Hecht of the obligations the protective order imposed on his
 use of the confidential information. There is similarly no
 sufficient basis for finding that Mr. Lee should have known
 that Mr. Hecht would independently decide to violate the
 protective order. In these circumstances, all that remains
 regarding the first theory of contempt is the fact that Mr.
 Hecht made an improper disclosure in the Florida action,
 but Static conceded at oral argument that it would be erro-
 neous for the district court to hold Leader and Mr. Lee in
 contempt for Mr. Hecht’s disclosure. The district court’s
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 STATIC MEDIA LLC   v. LEADER ACCESSORIES LLC                 9

 first basis for finding contempt therefore was an abuse of
 discretion.
                               II
     The second basis relied on by the district court, and de-
 fended on appeal by Static, was that Mr. Lee’s disclosure to
 develop a joint defense strategy itself constituted an imper-
 missible use of the confidential information not “solely” for
 the purpose of the Wisconsin action. The magistrate judge
 noted that Leader “provide[d] scant detail about the nature
 of the JDG or the exact nature of Hecht’s services,” and
 concluded that the JDA, “a private contract between
 Leader and OJ Commerce,” could not “supersede, modify,
 or amend the protective order entered in this case.”
 J.A. 16. The district court agreed, dismissing “whatever
 arguable role [Mr. Hecht] may have played in assisting
 [Leader] as a so-called 4(f) ‘consultant,’” before concluding
 that Mr. Lee’s disclosure violated the protective order’s use
 restrictions. J.A. 21.
      Leader claims that Mr. Lee’s disclosure was permitted
 by paragraph 4(f) of the protective order because Mr. Hecht
 was a contractual consulting attorney hired to “discuss[]
 various aspects of the defenses, including issues of retain-
 ing/sharing experts, damages evaluation, invalidity and
 non-infringement arguments in Leader’s motion for sum-
 mary judgment filing, overall joint defense strategies, etc.”
 Appellant’s Br. 8. But Static contends that the disclosure
 of the information to Mr. Hecht was not “solely for the pur-
 pose of [the Wisconsin action]” because it was to be used for
 developing a joint defense strategy for both actions.
 J.A. 43. Static characterizes Mr. Lee’s testimony that he
 shared “the deposition transcripts . . . for more effective
 joint defense consultation and discussion,” including “vari-
 ous aspects of the defenses, including . . . overall joint de-
 fense strategies, etc.,” as an “admi[ssion] that [he] disclosed
 the confidential information for a purpose other than the
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 10               STATIC MEDIA LLC   v. LEADER ACCESSORIES LLC

 defense of the [Wisconsin] action alone.” Appellee’s Br. 10–
 11 (quoting J.A. 98). Thus, according to Static, Mr. Lee’s
 use of the information for joint defense purposes was im-
 permissible.
     Because contempt is a “severe remedy,” the Supreme
 Court has recently instructed that courts should not “re-
 sort[] to [it] where there is [a] fair ground of doubt as to the
 wrongfulness of the [contemnor’s] conduct.” Taggart, 139
 S. Ct. at 1801–02 (quoting Cal. Artificial Stone, 113 U.S. at
 618). “Under the fair ground of doubt standard, civil con-
 tempt . . . may be appropriate when the [contemnor] vio-
 lates a [protective] order based on an objectively
 unreasonable understanding of the . . . order or the stat-
 utes that govern its scope.” Id. at 1802. The question, then,
 is whether it was objectively unreasonable to conclude that
 Mr. Lee’s use of the information for joint defense purposes
 was permitted by the protective order.
     The alleged violation of the protective order turns on
 the meaning of the term “use” and whether it extends to a
 disclosure to parties bound by the protective order. When
 the Supreme Court was similarly tasked with interpreting
 “use” in a criminal statute, it instructed that the term “use”
 “c[ould not] be interpreted apart from context,” and should
 instead be “analyzed in light of the terms that surround it.”
 Smith v. United States, 508 U.S. 223, 229 (1993); see also
 Phillips v. AWH Corp., 415 F.3d 1303, 1314 (Fed. Cir. 2005)
 (en banc) (“[T]he context in which a term is used in the as-
 serted claim can be highly instructive.”). Other circuits
 have followed this instruction when interpreting “use” in
 protective orders. The Ninth Circuit held that a protective
 order must be interpreted “to comply with common sense”
 and in a manner that “connect[s] its prohibitions to its pur-
 pose.” In re Dual-Deck Video Cassette Recorder Antitrust
 Litig., 10 F.3d 693, 695 (9th Cir. 1993).
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 STATIC MEDIA LLC   v. LEADER ACCESSORIES LLC               11

      We conclude that it was improper to hold Leader and
 Mr. Lee in contempt because, when read in context, there
 is a fair ground of doubt as to whether the protective order
 barred Mr. Lee’s disclosure to develop a joint defense strat-
 egy. Looking to the order’s stated purpose, its goal is pre-
 venting the public dissemination and disclosure of
 sensitive information:
     The parties and non-parties to this litigation may
     assert that public dissemination and disclosure of
     Confidential or Highly Confidential – Trial Coun-
     sels’ Eyes Only information could cause injury or
     damage to the party or non-party disclosing or pro-
     ducing the information, and could place that party
     or non-party at a competitive disadvantage[.]
 J.A. 42.
      That the protective order exists to prevent injury, dam-
 age, or competitive disadvantages resulting from public
 disclosure of the information suggests that a “use” entirely
 internal to protective order signatories—developing a joint
 defense strategy—would not violate its terms, even though
 the information would be used to develop a strategy bene-
 ficial to both the Wisconsin action and the Florida action.
 In other words, “use” here implies disclosure to the public
 or those not signatories to the protective order. The rea-
 sonableness of this interpretation is supported by decisions
 holding that the use of information gained by an attorney
 under a protective order in one case may appropriately be
 used by the same attorney to develop a strategy applicable
 to a second action.
     In Dual-Deck, the Ninth Circuit vacated a district court
 decision holding the plaintiff in contempt for violating a
 protective order, the terms of which required that confiden-
 tial information obtained in the parties’ 1987 action be
 “used solely in the preparation for trial and/or trial of this
 action” and “shall not be used at any time for any other
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 12               STATIC MEDIA LLC   v. LEADER ACCESSORIES LLC

 purpose whatsoever.” 10 F.3d at 694. The district court
 held that the plaintiff violated the order by using infor-
 mation obtained in discovery in the 1987 action to com-
 mence another action against the same defendant in 1990;
 referencing that information under seal in support of a mo-
 tion in that action; and requesting discovery in that action
 based on the confidential information. Id. In vacating the
 district court’s decision, the Ninth Circuit explained that
 the protective order was designed “to protect commercial
 secrets” and noted that the plaintiff “went to great lengths
 to avoid revealing in the public filings anything it had
 learned in discovery.” Id. at 695–96. It held that interpret-
 ing “use” divorced from the order’s goal of protecting com-
 mercial secrets “would be absurd,” explaining:
      Because [plaintiff’s] lawyers cannot achieve total
      amnesia and all their subsequent work in antitrust
      litigation against the defendants (and perhaps an-
      yone else) would be informed by what they learned
      during discovery in the 1987 suit, the order would
      prohibit them from representing [plaintiffs] at all
      in the 1990 litigation. Indeed, lawyers who learn
      from and use their experience obtained in discovery
      under such an order would have to change fields,
      and never do antitrust work again, lest they “use”
      what they learned in a prior case “in any way what-
      soever” in any “other action.” For the protective or-
      der to comply with common sense, a reasonable
      reading must connect its prohibitions to its pur-
      pose—protection against disclosure of commercial
      secrets.
 Id. at 695; see also Royal Park Invs. SA/NV v. Deutsche
 Bank Nat’l Tr. Co., 192 F. Supp. 3d 400, 406 (S.D.N.Y.
 2016) (finding prohibition on use of discovery materials in
 other cases particularly “problematic” when “two lawsuits
 have been filed by the same plaintiff, in the same court, on
 the same legal theories, against two defendants who
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 STATIC MEDIA LLC   v. LEADER ACCESSORIES LLC               13

 already share the same counsel”); Streck, Inc. v. Rsch. &
 Diagnostic Sys., Inc., 250 F.R.D. 426, 435 (D. Neb. 2008)
 (finding no violation of similar order because a “general ref-
 erence to protected documents [in subsequent] proceedings
 [was] insufficient” when “counsel did not disclose any con-
 fidential information”); Hu-Friedy Mfg. Co. v. Gen. Elec.
 Co., No. 99 C 0762, 1999 WL 528545, at *3 (N.D. Ill. July
 19, 1999) (declining to interpret order “barring future use
 of confidential information that is independently relevant
 and discoverable in a subsequent action into a restriction
 on an attorney’s right to practice law”). 1 Indeed, at oral
 argument, Static acknowledged that it would be permissi-
 ble under the protective order for an attorney who gains
 knowledge in one case to use that information to develop a
 strategy applicable to another case.
      Under Taggart, contempt is improper when there is a
 fair ground of doubt as to whether a party’s actions violate
 a protective order, 2 and applying that standard here, it is

     1    Other district court cases finding violations of pro-
 tective orders typically involve public disclosures of infor-
 mation or disclosures to parties who are not signatories to
 the protective orders. See, e.g., EEOC v. Dial Corp., No. 99
 C 3356, 2001 WL 1945089, at *4 (N.D. Ill. Dec. 6, 2001)
 (finding contempt for revealing confidential information to
 the press); Grove Fresh Distribs., Inc v. John Labatt Ltd.,
 888 F. Supp. 1427, 1445–47 (N.D. Ill. 1995) (finding con-
 tempt for same and for disclosing confidential materials in
 publicly filed brief in separate action).
     2    To the extent that our earlier decision in TiVo Inc.
 v. EchoStar Corp., 646 F.3d 869, 887–88 (Fed. Cir. 2011)
 (en banc), might be read as rejecting the fair ground of
 doubt standard, the Supreme Court’s decision in Taggart
 clearly holds that civil contempt is improper when there is
 a “fair ground of doubt as to” whether a party’s actions vi-
 olated a court order, 139 S. Ct. at 1801–02.
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 14              STATIC MEDIA LLC   v. LEADER ACCESSORIES LLC

 unreasonable to view the protective order as clearly prohib-
 iting the disclosure of confidential documents to develop a
 joint defense strategy when the recipient is also a signatory
 to the protective order. The district court’s conclusion oth-
 erwise was an abuse of discretion. It was objectively rea-
 sonable to interpret the protective order as prohibiting only
 the public disclosure of documents or disclosure to a third
 party not bound by the protective order. That is not what
 Mr. Lee did here.
     Because we hold that there was a “lack of evidence sup-
 porting the [district court’s] finding of contempt,” the
 award of sanctions and attorney’s fees similarly “cannot
 stand.” Autotech Techs. LP v. Integral Rsch. & Dev. Corp.,
 499 F.3d 737, 752 (7th Cir. 2007).
                        CONCLUSION
     For the foregoing reasons, we reverse the district
 court’s contempt order and its corresponding award of
 sanctions and attorney’s fees.
                        REVERSED
                            COSTS
 Costs to appellant.
Case: 21-2303     Document: 39      Page: 15   Filed: 06/28/2022

    United States Court of Appeals
        for the Federal Circuit
                   ______________________

                   STATIC MEDIA LLC,
                     Plaintiff-Appellee

                               v.

                LEADER ACCESSORIES LLC,
                    Defendant-Appellant

                     JEN-FENG LEE,
                          Appellant
                   ______________________

                         2021-2303
                   ______________________

    Appeal from the United States District Court for the
 Western District of Wisconsin in No. 3:18-cv-00330-wmc,
 Judge William M. Conley.
                 ______________________

 REYNA, Circuit Judge, dissenting.

     I respectfully dissent.
     We review the district court’s decision regarding sanc-
 tions for violation of a discovery order under the law of the
 regional circuit, here, the Seventh Circuit. See Graves v.
 Kemsco Grp., Inc., 852 F.2d 1292, 1292 (Fed. Cir. 1988).
 The Seventh Circuit is clear that the district court is enti-
 tled to deference in matters concerning sanctions because
 the district court is in the best position to determine if a
 party has complied with its own discovery orders.
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 2                STATIC MEDIA LLC   v. LEADER ACCESSORIES LLC

 Melendez v. Ill. Bell Tel. Co., 79 F.3d 661, 670 (7th Cir.
 1996); see also Smith v. Chi. Sch. Reform Bd. of Trs., 165
 F.3d 1142, 1144 (7th Cir. 1999) (in reviewing the imposi-
 tion of sanctions in a suit relating to racial discrimination,
 the Seventh Circuit stated expressly that “Appellate re-
 view of sanctions is deferential”). Accordingly, we cannot,
 under Seventh Circuit law, reverse the imposition of sanc-
 tions for a violation of a discovery order unless it is clear
 that no reasonable person could concur in the trial court’s
 assessment. Melendez, 79 F.3d at 670; see also Scott v.
 Chuhak & Tecson, 725 F.3d 772, 778 (7th Cir. 2013) (“[W]e
 uphold any exercise of the district court’s discretion that
 could be considered reasonable, even if we might have re-
 solved the question differently.”). But, here, the majority
 denies deference to resolve the question differently.
      Appellee asserted claims of patent infringement
 against multiple defendants in separate suits in distinct
 districts. The defendants in those cases, Appellant and a
 nonparty to this appeal, entered into a joint defense agree-
 ment under which Appellant disclosed Appellee’s confiden-
 tial financial information. That confidential information
 was used outside this litigation, and more specifically, by
 the nonparty in the second litigation. The district court
 determined that Appellant knew or should have known
 that the disclosure would be used in violation of the protec-
 tive order. As such, the court exercised its discretion to is-
 sue monetary sanctions against Appellant under Federal
 Rule of Civil Procedure 37(b)(2)(A)(vii).
     Protective orders, such as the one at issue in this case,
 operate as an agreement between the parties meant to pro-
 mote an efficient discovery process, while safeguarding the
 secrets and proprietary information of the parties. In ex-
 change for the ability to review such information, outside
 counsel agrees to protect against the disclosure of the
Case: 21-2303    Document: 39      Page: 17     Filed: 06/28/2022

 STATIC MEDIA LLC   v. LEADER ACCESSORIES LLC                3

 confidential information to persons outside of that particu-
 lar litigation. 1
     Here, Appellant alleges that its disclosure was for the
 purpose of facilitating a “more effective joint defense con-
 sultation and discussion.” J.A. 98. In other words, Appel-
 lant and the nonparty shared and discussed Appellee’s
 confidential information to formulate a joint defense strat-
 egy that would be used in both cases, not solely this action.
 Even if Appellant believed that the disclosed information,
 and the joint defense strategy formulated based on that
 confidential disclosure, would be used only for the purposes
 of this litigation, that belief was unreasonable and, in my
 view, was a violation of the protective order. More specifi-
 cally, on this record, it would be unreasonable for Appellant
 to believe that Appellant could make the disclosure and
 that the nonparty would not use that information, or the
 joint defense strategy formulated based on the disclosed
 confidential information, in the second litigation. Indeed,
 in my view, Appellant was in violation of the protective or-
 der independently of whether the information was eventu-
 ally used in the second litigation. Accordingly, on this
 record, I would conclude that the district court did not
 abuse its discretion in determining that Appellant violated
 the protective order.

     1   For example, here, the protective order provides
 that “[a]ll Confidential information and documents, along
 with the information contained in the documents, shall be
 used solely for the purpose of this action.” J.A. 42 (empha-
 sis added).