Anova Applied Electronics Inc v. Precision Appliance Technology Inc

1 THE HONORABLE RICHARD A. JONES [7] 8 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON 9 AT SEATTLE 10 ANOVA APPLIED ELECTRONICS, ) INC., ) 11 ) Plaintiff, ) Case No. 2:22-CV-00042-RAJ 12 ) v. ) 13 ) ORDER PRECISION APPLIANCE ) 14 TECHNOLOGY, INC., ) ) 15 Defendant. ) [16] 17 I. INTRODUCTION [18] This matter is before the Court on several pending motions: the parties’ joint [19] motion regarding the protective order (Dkt. # 28), Defendant’s motion to supplement [20] Docket # 28 (Dkt. # 31), Plaintiff’s motion for an extension of time to join additional [21] parties and extend discovery (Dkt. # 32), and Defendant’s motion to stay proceedings [22] pending resolution of Defendant’s motion for summary judgment (Dkt. # 40). The Court [23] has reviewed the parties’ submissions and decided the motions without oral argument. [24] See Local Civil Rule (LCR) 7(b)(4). [27] 1 II. BACKGROUND 2 Plaintiff Anova Applied Electronics, Inc. (“Anova” or Plaintiff) is a San 3 Francisco-based company that creates smart kitchen appliances. Dkt. # 1, ¶ 6 (Compl.). 4 Plaintiff is suing Defendant Precision Appliance Technology, Inc. (“Precision” or 5 Defendant) for infringement of Plaintiff’s Precision Cooker sous vide immersion 6 circulator, covered by U.S. Patent No. D 862,154 (the “D154 patent”). Id., ¶¶ 14, 16. 7 Plaintiff alleges that Defendant advertises, offers for sale, and/or sells the Vesta 8 Precision Sous Vide Immersion Circulator (the “Accused Product”) on Amazon to 9 customers throughout the United States. Id. 10 On October 13, 2022, Defendant filed a Motion for Summary Judgment of Non11 Infringement, or Alternatively, Invalidity. Dkt. # 35. Defendant argues that the Accused 12 Product does not infringe on the D154 patent, and alternatively, that the D154 patent is 13 invalid in light of Plaintiff’s prior art product. Id. Defendant’s summary judgment 14 motion is under advisement. 15 III. DISCUSSION 16 a. Motion to Supplement Docket (Dkt. # 31) and LCR 26 Protective 17 Order Dispute (Dkt. # 28) 18 The parties agree that a protective order should be entered in this case, but jointly 19 request that the Court resolve a dispute concerning access to highly confidential 20 information. Specifically, the parties’ dispute concerns the potential designation of 21 Plaintiff’s in-house counsel Ray Ashburg with permission to view Defendant’s 22 information or items marked “CONFIDENTIAL.” Each party submitted proposed 23 protective order language pursuant to LCR 26(c)(2). Dkt. # 28. As an initial matter, the 24 Court GRANTS Defendant’s unopposed motion to supplement its written arguments 25 filed in response to Plaintiff’s “corrected/supplemental” declaration of Mr. Ashburg. 26 Dkt. # 31. 27 Moving on to the substance of the parties’ request, with regard to Section 4.2 of 1 the proposed protective order, Plaintiff proposes the following language: [2] “4.2 Disclosure of “CONFIDENTIAL” Information or Items. Unless otherwise [3] ordered by the court or permitted in writing by the designating party, a receiving 4 party may disclose confidential material only to: 5 (a) the receiving party’s counsel of record in this action, as well as employees of counsel to whom it is reasonably necessary to disclose the [6] information for this litigation; [7] (b) the officers, directors, and employees (including in house counsel) of [8] the receiving party to whom disclosure is reasonably necessary for this 9 litigation, unless a party designates that a particular document or material produced is for LITIGATION COUNSEL’S EYES ONLY. For 10 the sake of clarity, designation as “LITIGATION COUNSEL’S EYES ONLY” includes Ray Ashburg, Anova’s litigation counsel of record in [11] this suit…” [12] 13 Dkt. # 28-1 (Proposed Protective Order) at 4. Defendant, on the other hand, 14 proposes the following language: [15] “4.2 Disclosure of “CONFIDENTIAL” Information or Items. Unless otherwise 16 ordered by the court or permitted in writing by the designating party, a receiving party may disclose confidential material only to: [17] (a) the receiving party’s counsel of record in this action, as well as employees [18] of counsel to whom it is reasonably necessary to disclose the information 19 for this litigation; 20 (b) the officers, directors, and employees (including in house counsel) of the 21 receiving party to whom disclosure is reasonably necessary for this litigation, unless a party designates that a particular document or material 22 produced is for Outside Attorney’s Eyes Only. For the sake of clarity, designation as “OUTSIDE ATTORNEY’S EYES ONLY” excludes Ray [23] Ashburg…” [24] Id. [25] Plaintiff argues that Mr. Ashburg, Senior Associate General Counsel and Head of [26] North America IP for Plaintiff’s parent company Electrolux, should be permitted to [27] 1 view information that Defendant considers to be for “Outside Counsel’s Eyes Only.” 2 Dkt. # 28 at 3. According to Mr. Ashburg’s Corrected Declaration, he manages and 3 advises on intellectual property-related agreements, including technology and brand 4 licensing agreements, for Electrolux. Dkt. # 30 at 2. He states that he advises on 5 trademark clearances and “filing/prosecution/opposition of trademark applications” for 6 both Electrolux and Anova. Id. He is also Anova’s counsel of record in this matter. See 7 Dkt. ## 9, 10. Further, Mr. Ashburg states that he does not participate in any business or 8 commercial activity at Electrolux or Anova, has no role in forming or assisting any 9 strategic business or commercial decisions at either company, and does not handle 10 patent preparation or patent prosecution for Anova. Id. at 4. Plaintiff argues that Mr. 11 Ashburg has no strategic or competitive business decision-making authority, and that if 12 Mr. Ashburg’s access to confidential material is prohibited, Plaintiff will be 13 substantially prejudiced because Mr. Ashburg, as counsel of record, has been heavily 14 involved in this case since its filing. Dkt. # 28 at 4. According to Plaintiff, thus far, 15 Defendant has declined to produce confidential information in response to various 16 discovery requests due to this dispute over Mr. Ashburg and has indicated that it will 17 produce responses once a protective order limiting Mr. Ashburg’s access to highly 18 confidential information is in place. Dkt. # 30 at 15-19. 19 Defendant argues that Electrolux, Mr. Ashburg’s employer, is a potential 20 competitor of Precision and that to allow counsel to a potential competitor and non-party 21 access to confidential information would create potential for abuse and prejudice 22 Defendant. Dkt. # 28 at 11. Defendant argues that Mr. Ashburg is a competitive decision 23 maker, as evidenced by the responsibilities listed in his online LinkedIn profile. Dkt. # 28 24 at 11. As of August 2022, Mr. Ashburg’s profile indicated that his responsibilities as 25 Associate General Counsel at Electrolux North America included IP litigation, 26 trademarks, technology and brand licensing, and anticounterfeiting. Dkt. # 28, Ex. 1. 27 Defendant argues that his involvement with licensing and IP-related activities constitutes 1 competitive decision making, such that he should be barred from viewing Defendant’s 2 highly confidential materials. Dkt. # 31 at 3. 3 Under Federal Rule of Civil Procedure 26(c) the Court may, for good cause and 4 with a showing that the parties have conferred in good faith, issue a protective order. 5 Fed. R. Civ. P. 26(c)(1). Further, the Court may “make any order which justice requires 6 to protect a party or person from annoyance, embarrassment, oppression, or undue 7 burden or expense, including… requiring that a trade secret or other confidential 8 research, development, or commercial information not be revealed or be revealed only 9 in a specified way[.]” Fed. R. Civ. P. 26(c)(1)(G). The Court must balance the 10 conflicting interests of the parties when considering protective orders for trade secrets, 11 specifically the risk to Defendant of inadvertent disclosure of trade secrets to 12 competitors against the risk that Plaintiff’s prosecution of its claims will be impaired. 13 Brown Bag Software v. Symantec Corp., 960 F.2d 1465, 1470 (9th Cir. 1992). In 14 evaluating the parties’ conflicting interests, the Court should look at the parties’ 15 “specific factual circumstances.” Id. at 1471 . “In granting a protective order that 16 excludes counsel or others from access to confidential information, the sole question is 17 whether there is an unacceptable risk or opportunity for the inadvertent disclosure of 18 confidential information.” ODS Tech., L.P v. Magna Entm’t Corp., 583 F.Supp.2d 1141 , 19 1144 (citing Matsushita Elec. Indus. Co. Ltd. v. U.S., 929 F.2d 1577, 1579 (Fed. Cir. 20 1991)); Autotech Tech. Ltd. P’ship v. Automationdirect.com, Inc., 237 F.R.D. 405 , 407 21 (N.D. Ill. 2006)). Crucially, the Court must consider whether the proposed designees are 22 engaged in “competitive decision making,” because if the designees are engaged in such 23 endeavors, “the risk of disclosure may outweigh the need for confidential information.” 24 Intel Corp. v. Via Tech., Inc., 198 F.R.D. 525, 529 (N.D. Cal. 2000) (citing U.S. Steel 25 Corp. v. U.S., 730 F.2d 1465, 1468 (Fed. Cir. 1984)). “Competitive decision making” is 26 “shorthand for counsel’s activities, association, and relationship with a client that are 27 such as to involve counsel’s advice and participation in any or all of the client’s 1 decisions (pricing, product design, etc.) made in light of similar or corresponding 2 information about a competitor.” Intel, 198 F.R.D. at 529 (quoting U.S. Steel, 730 F.2d 3 at 1468 n.3). 4 The Court is not persuaded that Mr. Ashburg is in fact a “competitive decision 5 maker” at either Electrolux or Anova. Mr. Ashburg states that he manages and advises 6 only parent company Electrolux (and not Anova) on IP related agreements, Dkt. 30 at 2, 7 and that he does not take part in any commercial or business activity at either Electrolux 8 or Anova. Further, he states that he does not handle patent preparation or patent 9 prosecution for either company. Id. at 4 . While Defendant attempts to rebut these 10 statements with Mr. Ashburg’s LinkedIn profile, the Court has no reason to doubt 11 counsel’s averments that he is isolated from competitive business activities. The Court 12 finds Defendant’s speculative assertion that Electrolux could be in “future competition” 13 with Precision unpersuasive, especially coupled with Mr. Ashburg’s statement that he 14 does not take part in any strategic business or commercial decisions for Electrolux. See 15 American Standard v. Pfizer, Inc., 828 F.2d 734, 741 (Fed. Cir. 1987) (noting that 16 “[c]ourts have presumed that disclosure to a competitor is more harmful than disclosure 17 to a noncompetitor”). 18 While some courts have held that negotiating licensing agreements in litigation 19 constitutes competitive decision making, see, e.g., Intel Corp. v. VIA Techs, Inc., 198 20 F.R.D. 525 , 530 (N.D. Cal. 2000) (stating, “[in-house counsel’s] involvement in 21 licensing through litigation constitutes competitive decision making, because her advice 22 and counsel necessarily affect licensing decisions”), the Court credits Mr. Ashburg’s 23 statements indicating his lack of involvement with strategic business and competitive 24 decisions for both entities. And when it comes to Defendant’s actual competitor— 25 Anova—Mr. Ashburg maintains a degree of separation, because he has no access to 26 Anova’s networks and computer systems. Dkt. # 30 at 3-4. Defendant has not shown 27 that Mr. Ashburg “gives advice or participates in any or all of [Anova’s] decisions … 1 made in light of similar or corresponding information about a competitor.” ODS Tech., [2] 583 F.Supp.2d at 1144 -1145 (quoting Brown Bag, 960 F.3d at 1470) (quotations 3 omitted). 4 Further, the Court agrees that preventing the Mr. Ashburg from accessing highly 5 confidential material “could impair [Plaintiff’s] ability to prosecute its claims against 6 defendants….” MGP Ingredients, Inc. v. Mars, Inc., 245 F.R.D. 497, 502 (D. Kan. 7 2007) (allowing Plaintiff’s in-house personnel access to confidential information 8 because preventing access would impair Plaintiff’s ability to prosecute claims at the 9 heart of the suit); see also L-3 Commc’n Corp. v. Jaxon Eng’g & Maint., Inc., 863 10 F.Supp.2d 1066, 1092 (D. Colo. 2012) (affirming Magistrate Judge decision to allow 11 current employee access to AEO material because the employee possessed both 12 expertise and factual knowledge, and was “essential to the ability of the plaintiff to 13 prove their case”). Mr. Ashburg has been closely involved in this action since its 14 inception—he indicates that he drafted the complaint alongside Plaintiff’s outside 15 counsel—and he states that he will continue to work as Plaintiff’s counsel of record. 16 Dkt. #30 at 3. The Court concludes that Plaintiff will suffer prejudice if Mr. Ashburg is 17 denied access to highly confidential information because such information will bear on 18 his advice and counsel to Plaintiff in this litigation. Javo, 2020 WL 2062146 , at *4 19 (finding that Plaintiff would suffer “appreciable prejudice” if former general counsel 20 and senior executive vice president of operations not provided access to “Outside 21 Attorneys’ Eyes Only” material because access to such information would bear on their 22 advice and counsel). 23 Plaintiff has also taken additional precautions to protect the confidentiality of 24 sensitive information, such as using a third-party discovery vendor to ensure that no 25 Electrolux or Anova employees have access to Defendant’s discovery materials. And 26 while it may not be common to allow in-house counsel provided by a parent company 27 access to Defendant’s highly confidential material, it is hardly “unprecedented” in the 1 Ninth Circuit, as Precision asserts. See Alza Corp. v. Impax Labs., Inc., No. C-032 4032VRW, 2004 WL 7339748 , at *4-5 (N.D. Cal. June 21, 2004) (allowing in-house 3 counsel of parent company to access confidential information when counsel was not 4 involved in competitive decision making or patent prosecution). The Court finds that the 5 provisions of the protective order, which allow for the use of confidential material only 6 in connection with prosecuting, defending, or settling this litigation, should serve to 7 prevent the “unacceptable risk or opportunity for the inadvertent disclosure of 8 confidential information.” ODS Tech., 583 F.Supp.2d at 1144 . 9 If some factual basis to believe that Mr. Ashburg acts as a competitive decision 10 maker for either Anova or Electrolux emerges, Defendant may request a modification of 11 the protective order. Javo Beverage Co., Inc. v. California Extraction Ventures, Inc., 12 No. 19-CV-2062146, 2020 WL 2062146 , at *5 (S.D. Cal. Apr. 29, 2020) (noting that 13 Defendant could renew request to prohibit Plaintiff’s current outside counsel, who was 14 formerly general counsel, from accessing highly confidential information should 15 Defendant develop a basis to believe that outside counsel was in fact a competitive 16 decision maker). The Court shall issue a Protective Order concurrently with this Order. 17 b. Motion for Relief From a Deadline (Dkt. # 32) 18 Plaintiff seeks to extend the deadline to join Defendant’s parent company 19 Guangzhou Argion Electric Appliance Co., Ltd. (“GAEA”) as a party to this suit and 20 move the current close of fact discovery from January 10, 2023 to February 24, 2023. 21 Dkt. # 32 at 1. Defendant opposes this request and filed a response. Dkt. # 37. 22 According to Plaintiff, it served Defendant with interrogatories seeking information 23 regarding Defendant’s corporate structure, parent companies, and subsidiaries in June 24 2022. Dkt. # 32 at 2. Defendant objected to providing this information to Mr. Ashburg 25 in particular, leading to the submission of the parties’ LCR 26 motion (Dkt. # 28). Id. at 26 3. On September 2, Defendant supplemented its response to the interrogatories and 27 indicated that GAEA is Defendant’s sole owner. Dkt. # 33 (Billick Decl.) at ¶ 5. Soon 1 thereafter, this information was shared with Mr. Ashburg. Plaintiff indicates that it has 2 served Defendant with further interrogatories regarding GAEA’s relationship to the 3 Accused Product. Id. at ¶ 5. 4 Defendant argues that its Rule 7.1 disclosure statement, filed months prior in 5 March 2022, alerted Plaintiff to the fact that it is a subsidiary of GAEA. Dkt. # 18. 6 Further, the deadline to join additional parties passed on July 22, and Defendant’s 7 responses to Plaintiff’s interrogatories concerning Defendant’s parent company were 8 not due until August 1. Dkt. # 37 at 2. Instead, Plaintiff waited until mid-September to 9 seek further discovery concerning GAEA and until October to request a modification of 10 long-set deadlines. Id. at 3. Defendant argues that extending the deadline to join GAEA 11 at this point is not only prejudicial to Anova, but would also extend the case by at least 12 ten months due to the time it would take Plaintiff to serve China-based GAEA via the 13 Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents. Dkt. 14 # 37 at 5-6. In any event, Defendant states that GAEA is not involved with activities 15 related to the Accused Product in the United States and does not benefit from sales of 16 the product. Id. at 6. Plaintiff responds that it did in fact move diligently, and that 17 Defendant only stated that it was a subsidiary of GAEA in its corporate disclosure 18 statement, without mentioning that Anova is wholly owned by GAEA. Dkt. # 38 at 2. 19 “[A] schedule shall not be modified except upon a showing of good cause and by 20 leave of the district judge…” Fed. R. Civ. P. 16(b). “Mere failure to complete discovery 21 within the timeframe allowed does not constitute good cause for an extension or 22 continuance.” LCR 16(b)(6). On April 22, 2022, this Court ordered that any additional 23 parties to this action were to be joined by July 22, 2022. Dkt. # 26. Based on 24 Defendant’s Corporate Disclosure Statement, Plaintiff was aware that Precision is a 25 subsidiary of GAEA since at least March 16, 2022 and yet Plaintiff waited until the July 26 22 deadline had passed to seek leave from this Court to join GAEA as a party. 27 Plaintiff’s failure to complete necessary discovery within the time allowed does not 1 constitute “good cause” to extend the deadline, especially given that Plaintiff waited 2 until well after the deadline passed to seek an extension. While Plaintiff claims that it 3 cannot take Defendant’s statements as to GAEA’s lack of involvement with the 4 Accused Product at face value, “]p]atent infringement activities ordinarily cannot be 5 imputed from one company to its parent, subsidiaries, or sister companies.” Free-Free 6 Indus. Corp. v. First Design Global, No. EDCV 19-2462-GW-KESx, 2020 WL 7 7016676, at *2 (C.D. Cal. Aug. 31, 2020). That means that even if Defendant is found 8 to have infringed on Plaintiff’s patent, liability would not ordinarily be imputed to 9 GAEA. Given this, Plaintiff has not shown good cause to modify the deadline to join 10 additional parties, and the Court DENIES Plaintiff’s motion to extend the deadline to 11 join GAEA as a party. However, given the delay potentially caused by the disagreement 12 over the extent of Mr. Ashburg’s access to confidential materials produced in discovery, 13 the Court GRANTS Plaintiff’s request to extend the deadline for fact discovery to 14 February 24, 2023. 15 c. Motion to Stay Proceedings (Dkt. # 40) 16 Defendant seeks an order staying the proceedings pending resolution of 17 Defendant’s pending summary judgment motion and a protective order from a 30(b)(6) 18 deposition notice served by Plaintiff. Dkt. # 40. Defendant argues that the pending 19 summary judgment motion is dispositive of the entire case and regardless of whether the 20 Court decides that Plaintiff’s patent was (1) not infringed, (2) invalid, or (3) both, the 21 outcome will be dispositive of Plaintiff’s claim. Id. at 4. Defendant further argues that 22 the summary judgment motion is dispositive as to the issues on which Defendant 23 currently seeks duplicative discovery and that the motion can be decided without further 24 discovery on Plaintiff’s part. Id. at 4-5. Defendant objects to the 30(b)(6) deposition 25 notice because it seeks discovery on already fully-investigated issues of non26 infringement and invalidity and other non-relevant topics, such as Defendant’s process 27 of selecting the name “Precision” for its company. Id. at 7-8. 1 Plaintiff counters that expert discovery is currently underway and Plaintiff 2 expects that the resulting testimony will shed light on Defendant’s arguments 3 concerning non-infringement and invalidity. Dkt. # 49 at 9-10. Additionally, Plaintiff 4 states that it is currently seeking discovery regarding the development and marketing of 5 the Accused Product and consumer perceptions of the design of the Accused Product, 6 which Plaintiff argues is relevant to the issue of infringement. Id. at 12. 7 “Under Federal Rule of Civil Procedure 26(c), district courts, upon a showing of 8 ‘good cause,’ have broad discretion in determining whether to stay discovery pending 9 the resolution of a potentially dispositive motion.” Ziegler v. Hotel California by the 10 Sea, LLC, No. C21-1702-TL-SKV, 2022 WL 1499670 , at *2 (W.D. Wash. May 12, 11 2022) (citing Little v. City of Seattle, 863 F.2d 681, 685 (9th Cir. 1988)). The Court 12 must consider two factors in deciding whether to grant a stay: “First, the pending 13 motion must be potentially dispositive of the entire case, at least on the issue to which 14 discovery is directed. Second, the court must determine if the pending dispositive 15 motion can be decided without additional discovery.” Ahern Rentals, Inc. v. 16 Mendenhall, C20-0542-JCC, 2020 WL 8678084 , *1 (W.D. Wash. July 9, 2020) 17 (citations omitted). However, to “relieve a party of the burdens of discovery while a 18 dispositive motion is pending… is the exception and not the rule.” Ziegler, 2022 WL 19 1499670, at *2 (quoting White v. Skagit Bonded Collectors, LLC, No. C21-0697-LK, [20] 2022 WL 508825 , at *1 (W.D. Wash. Jan 24, 2022). The Court declines to make this 21 case an exception. 22 The Court finds that Defendant has not demonstrated the requisite good cause to 23 stay discovery. Without prejudging the merits of Defendant’s motion, the Court finds 24 that while the pending summary judgment motion may indeed be dispositive, to stay 25 discovery at this point could prevent Plaintiff from “present[ing] facts essential to 26 justify its opposition” to summary judgment. Fed. R. Civ. P. 56(d). Summary judgment 27 is generally “only appropriate after a nonmovant has had adequate time for discovery.” 1 Baca v. Biter, No. 1:15cv1916-DAD-HBK (PC), 2021 WL 1130794 , at *5 (E.D. Cal. 2 Mar. 24, 2021 ). Under the current case schedule fact discovery is due to close on 3 January 10, 2023, expert discovery closes on April 28, and the deadline to file 4 dispositive or Daubert motions is May 31. Ongoing fact discovery, particularly expert 5 discovery, is fertile ground for investigation and may provide information of relevance 6 to Plaintiff’s defense of the summary judgment motion. “Dispositive motions are not an 7 absolute reason to stall discovery.” United States v. Bayley, No. 3:20-cv-05867-DGE, [8] 2022 WL 1014993 , *10 (W.D. Wash. Apr. 5, 2022). This is particularly true 9 considering the recent delays in discovery concerning access to confidential documents 10 by Mr. Ashburg. See supra Part III(a). Additionally, ordering a stay would not 11 necessarily conserve judicial resources. Should Defendant’s summary judgment motion 12 be denied, it would then likely be necessary to extend the parties’ discovery deadlines, 13 which would impact the remaining dates on the case schedule. Because the Court will 14 not stay discovery, the Court also declines to issue a protective order from Plaintiff’s 15 30(b)(6) deposition notice and declines Plaintiff’s invitation to issue a sanction against 16 Defendant. The Court DENIES Plaintiff’s motion to stay proceedings and for a 17 protective order from Plaintiff’s 30(b)(6) notice. 18 // 19 // 20 // 21 // 22 // 23 // 24 // 25 // 26 // 27 // 1 IV. CONCLUSION 2 For the foregoing reasons, the Court GRANTS Plaintiff’s request concerning the 3 draft protective order and issues a protective order concurrently with this Order. Dkt. # 4 28. The Court GRANTS Defendant’s unopposed motion to supplement Dkt. # 28. Dkt. 5 # 31. The Court DENIES in part and GRANTS in part Plaintiff’s motion for relief 6 from a deadline. Dkt. # 32. The Court DENIES Defendant’s motion to stay discovery 7 and for a protective order. Dkt. #40. [8] 9 DATED this 30th day of November, 2022. [10] 11 A [12] 13 The Honorable Richard A. Jones United States District Judge