Court Opinion

ID: 9475926
Source: CourtListenerOpinion
Date Created: 2023-08-05 05:42:49.044248+00
Date Added: 2024-06-11T17:45:01.828572
License: Public Domain

RICH, Circuit Judge,
dissenting.
I dissent from the decision vacating the order quashing the subpoena and also from the suggestion to the Missouri District Court that it can craft a suitable protective order. This order is an impossibility. In all respects the majority is being unrealistic, impractical, and its holding is likely to encourage abuse of the discovery process.
There are some facts that are self-evident. One of them is that competitive business is a kind of economic warfare. A corollary of that, as every lawyer old enough to become a federal judge has learned from serving his business clients, is that close competitors do not usually hand out their sales statistics to one another but regard them as confidential and sensitive information which they often go to great pains to hide. That is a fact well enough known for a court to judicially notice, at least when they send their lawyers to oppose disclosure, and Judge Gunn, who quashed the subpoena seemed instinctively aware of it when it was pointed out to him by Hydro-Air’s counsel. He needed no evidence and no evidence was required to justify his action.
Another incontrovertible fact is that there can be no such thing as a protective order which will protect a company which has been forced to hand over its sales statistics to its competitor from what it is interested in being protected from — disclo*1214sure of its sales from its competitor. It is as obvious as the fact that once a secret is out, it is no longer a secret. The majority here appears naive. If it thinks otherwise, I suggest it try drafting the order as an instruction to the district judge.
One should have clearly in mind the situation before us. It is now reduced to an attempt to discover only Hydro-Air’s sales statistics but that is not how it all began and was not the situation as it was before Judge Gunn. The subpoena Truswal prepared asked for many other things: a sample of every model of strut made by Hydro-Air; all drawings it used in making the struts and drawings of the dies used; all documents relating to sales amounts; all documents relating to testing or comparative testing with Truswal or Gang-Nail systems; and testimony on the design, operation and methods of manufacture of Hydro-Air’s V-shaped metal web connectors. For a competitor to ask all that of a non-party was, of course, bound to elicit a motion to quash and a supporting memo which was filed before the district court judge who then held a hearing on May 16, 1986 at which attorneys for Truswal and Hydro-Air appeared. The subpoena was not entirely unproductive nor was Hydro-Air entirely uncooperative. There had been some agreement the day before the hearing between counsel and Truswal got samples, information on when models were first sold, and possibly other information not clear from the appendix before us. But on sales statistics and testing results they balked and the judge’s order, quoted in full by the majority, shows that Judge Gunn granted the motion to quash with respect to “the requested sales information and product test results.” The objections to the latter were that Truswal had no need for them in the Gang-Nail suit and that they would invade Hydro-Air’s confidential research procedures. Judge Gunn did the balancing of “the potential hardship to the party against whom discovery would be granted with that to the party to whom discovery would be denied,” called for by Fed.R.Civ.P. 26(b)(1), as amended in 1983 to minimize discovery abuse. Heat & Control, Inc. v. Hester Industries Inc., 785 F.2d 1017, 1023-24, 228 USPQ 926, 931 (Fed.Cir.1986).
Judge Gunn thus acted reasonably and within the law and sustained the motion to quash only on sales figures and tests, which appellant has now reduced on appeal to the single item of sales information by electing not to argue for the test results.
With respect to the issue to be decided, the majority opinion, like appellant’s brief which it tracks, leaves me in a quandary. Are we to decide whether appellant Hydro-Air carried its burden before Judge Gunn, where it obviously succeeded, or are we to decide whether Judge Gunn abused his discretion? This appeal is not like one bringing before us, for example, a lower court ruling on obviousness where the question is whether a party sustained its burden of overcoming the presumption of patent validity, where we decide whether the burden was or was not sustained. Obviousness is a question of law and that is what we have to do. The decision here was one under the Federal Rules of Civil Procedure — not a question of law — which leave to the discretion of the trial judge (or his surrogate in another jurisdiction) what he is going to allow to be discovered and under what conditions. The judge has rendered his decision against Truswal (at least in part) and we are not concerned with whether or not the “heavy burden” on Hydro-Air was sustained. It was. Our only duty is to determine whether discretion was abused and we start from there. The majority’s discussion of cases on the burden of the moving party before Judge Gunn is irrelevant to that task. At least, that is how it appears to me; why else are we talking about review “under an abuse of discretion standard,” as the majority says? What else is there to review? And why is the majority “persuaded that Hydro-Air did not carry the burden” before Judge Gunn. There is an utter inconsistency in making both of those pronouncements. Judge Gunn’s order proves conclusively that Hydro-Air carried its burden.
It appears to me that Truswal dropped everything from its subpoena except the sales figures (except for the information *1215Hydro-Air voluntarily gave it) because it knew full well that it could not support its requests. It seems still to have, however, a passionate desire for knowledge of its competitor’s sales but its reasons, as argued before us, for allegedly needing them to sustain its case against Gang-Nail in the Florida suit won’t pass inspection. The same is true of the majority’s arguments.
Truswal’s main legal point for allegedly needing sales figures from Hydro-Air is that in the Gang-Nail suit the validity of its patent may be at stake on the issue of obviousness, in which case it would need all the evidence it can get of the so-called “secondary consideration” of commercial success to bolster up the unobviousness of the patented invention. It colors that argument further by referring to its one-shot opportunity to sustain validity in view of Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, 402 U.S. 313, 91 S.Ct. 1434, 28 L.Ed.2d 788 (1971). If it had two dozen or two hundred competitors who allegedly had copied its patented structure, instead of only the two of record, I suppose it would argue it would need all their sales statistics also. This is transparently not the case and demonstrates, moreover, the obvious danger to the business community in giving Truswal access to a principal competitor’s confidential sales data. All one would have to do to get a competitor’s sales information would be to sue one of them and serve subpoenas asking for it on the others, saying it might be needed in the suit to defend against an obviousness defense.
Now, as a matter of common sense, the way one proves commercial success of a patented invention is, first, to demonstrate the success of the patentee or one or more licensees. Second, once an infringer is sued and proved to be an infringer, its sales are appropriately proved and added to the others. If in fact there is widespread copying, the copying is proved, which is another telling secondary consideration. Proof of all the infringement that exists is never necessary. It is merely cumulative evidence. Furthermore, it is necessary to establish that the alleged copies are actual infringements of the patent in suit before they can possibly be relevant and counted as successes of the patented invention. So far in this case, not one infringement has been proved.
I note in this connection that appellant’s brief begins by introducing us to the fact that there are three competitors in the field, plaintiff Truswal, defendant Gang-Nail, and Hydro-Air. Truswal holds patent 4,078,352 which was reissued, Gang-Nail holds patent 4,485,606, and Hydro-Air holds patent 4,348,850. Of course, the products all differ somehow. We are not enlightened further as to what the patents of anyone cover or what the differences are. It is far from clear that it can be established that what Hydro-Air sells could be established as commercial success of Truswal’s patented invention as claimed in the reissue patent in the Florida suit.
These facts Judge Gunn took into account and balanced them, as the rule requires him to do, against the unfairness of compelling Hydro-Air to divulge its sales figures to its competitor Truswal. He had a full grasp of the situation and he was not required to make “findings.” He asked two very pertinent questions:
THE COURT: As far as the case in Miami [against Gang-Nail] is concerned, how important' is that [sales] information? It’s not really very important from what I’m gathering, it’s just you’re saying it could add a little more weight? [Speaking to Mr. Trop, counsel for Truswal.]
* * * * * *
THE COURT: What about a protective order on the sales? Can there be any protective order?
MR. SENNIGER [For Hydro-Air]: Issuing from this court, Sir?
THE COURT: Any court.
The majority, tracking appellant’s brief, complains that Hydro-Air submitted no affidavit and no evidence before Judge Gunn, saying “Arguments of counsel are not evidence.” It seems to be on that basis that it holds, unjustifiably and irrelevantly, that Hydro-Air did not “carry the burden,” which, I have pointed out above, is not the *1216issue we have to decide. Of what use would an affidavit or some testimony be to establish what is self-evident? Competitors usually play their cards close to their chests, consider sales figures confidential, and resent having to divulge them. Non-parties like Hydro-Air should not be made to disclose them unless it serves some essential purpose in the trial. See Heat & Control, supra.
It is an interesting aspect of this case that appellant could not find what it calls a “white horse” case involving a patentee’s efforts to obtain discovery of allegedly infringing sales by a non-party for use in a patent infringement case against another. The majority has not found one either. Therefore, this case is by way of establishing for the first time a precedent in this court, which is this case. It concerns me greatly that this majority opinion should become the precedent, because it will be troublesome.
As I read the majority opinion, its finding of “abuse of discretion” resides in Judge Gunn’s failure to “articulate” the proper magic words indicating what is obvious to me from the reported hearing he conducted and order he wrote. In other words, the majority is here imposing a requirement for a certain amount of mumbo jumbo in the order, on top of the 15. pages of reported hearing, to show that the judge (1) balanced the contentions of both sides; (2) considered the appropriate conditions of Fed.R.Civ.P. 26(b)(1) under which he was operating; (3) applied one or more of them; (4) decided upon the impracticality of a protective order; and (5) preferably can cite a case or two, if any are known. Such a requirement is contrary to the spirit of the Federal rules of procedure which decry formalities and rituals.
I see no reason, on the clear record before us, to conclude that Judge Gunn did not exercise his discretion in strict accordance with the applicable rules and on an adequate showing. We can review what he did, but I view it as a total waste of judicial time to tell him to do it again and say more.
I would affirm.