On December 29, 2010, ALJ E. James Gildea issued the public version of Order No. 12 (dated December 3, 2010), denying Respondent Apple Inc.’s (“Apple”) motion to amend the Protective Order by adding a prosecution bar in Certain Electronic Devices With Image Processing Systems, Components Thereof, and Associated Software (Inv. No. 337-TA-724).

According to the Order, Apple asserted that a prosecution bar was necessary because attorneys and experts retained by Complainants S3 Graphics Co., Ltd. and S3 Graphics, Inc. (collectively, “S3G”) “work directly for Apple’s fierce competitors,” and that even though the protective order presently limited use of information to the current litigation, it “may not prevent inadvertent compromise,” of Apple’s sensitive information, citing In re Deutsche Bank Trust Co Americas, 605 F.3d 1373 (Fed. Cir. 2010) (“Deutsche Bank”).

S3G opposed Apple’s motion, arguing that Apple failed to (1) make any specific counsel-by-counsel showing required by Deutsche Bank before imposing a patent prosecution bar, or (2) cite any pending patent application involving any of the attorneys that represent S3G in this investigation.  The Commission Investigative Staff opposed a prosecution bar for S3G’s experts, but did not take a position on whether the bar should be imposed on S3G’s attorneys.

With respect to timeliness of Apple’s motion, ALJ Gildea determined that Apple waited nearly four months after the Protective Order had been entered and after discovery requests had been served and responded to, before raising the issue of a prosecution bar.  ALJ Gildea further determined that during this four month period, Apple and third parties produced documents and source code, and S3G’s attorneys had signed the Protective Order without any expectation that reviewing confidential information would prohibit them from engaging in future patent prosecution.  ALJ Gildea determined that Apple’s delay in seeking the prosecution bar is sufficient reason to deny the motion, but he further determined that the motion failed on the merits.

ALJ Gildea held that Deutsche Bank requires the following before a patent prosecution bar should be entered: (1) the information triggering the bar is confidential and relevant to patent prosecution (e.g., it is of a confidential technical nature, rather than confidential financial or public data); (2) a particular person having access to the information is involved in competitive decision making, i.e., “crafting the content of patent applications or advising clients on the direction to take their portfolios,” and (3) the risk of inadvertent disclosure by that person outweighs the burden a prosecution bar would impose on that individual.

Applying Deutsche Bank, ALJ Gildea first determined that Apple’s proposal to allow any party’s unilateral designation of confidential technical information to trigger the prosecution bar is overbroad, since in the instant proceeding it would correspond to information already published in patent documents or technology relating to Apple’s iPhone and iPad products that are already in wide use and subject to reverse engineering.  ALJ Gildea concluded that the Patent Act prohibits patent rights for inventions already in public use, and therefore litigation counsel would not be able to use such technical information to obtain patent rights.  ALJ Gildea further determined that Apple’s proposed bar would apply to anyone receiving confidential information, which is precisely the type of generalized prosecution bar criticized in Deutsche Bank.  As applied to S3G’s attorneys, ALJ Gildea determined that Apple failed to show on a “counsel-by-counsel” basis that any of the litigation attorneys representing S3G in this proceeding engage in patent prosecution for S3G or for any other client, or if so, that such prosecution rises to the level of “competitive decision making” in fields relevant to this proceeding.   ALJ Gildea also determined that balancing the right of other parties to counsel of their choice against the slim evidence alleged by Apple for inadvertent disclosure weighs against a prosecution bar.

Although Deutsche Bank did not specifically relate to expert witnesses, ALJ Gildea determined that its rationale should similarly apply to expert witnesses.  Specifically, ALJ Gildea determined that a prosecution bar should not apply to S3G’s expert witnesses because (1) as previously noted, there is no showing that confidential information would be relevant to patent prosecution, and Apple’s proposed amendment was overbroad in permitting unilateral designation of any confidential information to trigger the prosecution bar; (2) S3G’s experts were not shown to be in competition with Apple, or doing research in the same technical field as Apple; and (3) weighing the risk of inadvertent disclosure against the prejudice created by a prosecution bar, expert reports were presently due, and in view of at least one S3G expert refusing to agree to the bar, Apple’s proposal would cause the late replacement of at least one expert, thereby creating undue prejudice to S3G and/or delay in the proceedings contrary to ITC policy.

For all of the above reasons, ALJ Gildea denied Apple’s request for a prosecution bar against S3G’s litigation attorneys and experts.