CAFC Leans on District Court to Open Sealed Case

Kuney v. Bean (BayState v. Bowers) (Fed. Cir. 2008)

Professor Kuney is in the midst of writing a detailed account of the BayState v. Bowers case file. In that case, the CAFC affirmed the enforceability of a shrink wrap license term that barred reverse engineering of the software. In that case, a number of amici briefs argued that reverse engineering sits at the core of capitalism.

Like most patent lawsuits, the documents filed and exchanged in the case are kept from the public – sealed under a stipulated protective order signed by the Massachusetts District Court. To open the file, Kuney filed a motion to intervene in the case and to modify the protective order. Bowers agreed to open access to the documents, but Bean (BayState’s successor in interest) initially refused. Although Bean and Kuney later agreed to a modified protective order, the court refused to enter it and rejected Kuney’s motion to intervene.

On appeal, the CAFC found that the lower court had abused its discretion and vacated.

Opening a Sealed File: “Intervention is the proper means for a non-party to challenge a protective order.” When making a determination of whether to open records, the courts should begin with “a presumption of public access to judicial records.” In a decade old case, the First Circuit explained the value of public access as fostering “the important values of quality, honesty, and respect for the judicial system.” In this case, the CAFC recognized that Kuney needs the documents to do his scholarly work. However, the district court created no record of weighing the value of public access against the presumption of privacy.

Because the district court failed to explain its reason for dismissal, this case is vacated “for a balancing of the public and private interests in determining whether to grant or deny Professor Kuney’s motion.”

13 thoughts on “CAFC Leans on District Court to Open Sealed Case

  1. The Honorable Nathanial Gorton of the Federal District Court of Massachusetts recently followed the Federal Circuit Court of Appeals preference in this case to modify the protective order and did ultimately endorse that stipulated agreement between Professor Kuney and Bob Bean, who is the principal of the infringing yet bankrupt company. This case is on its way to becoming one of the longest running sagas in American jurisprudence. The underlying copyright infringement case was filed in 1991, tried in 2000, appealed to the US Supreme Court – cert. denied, precipitating bankruptcy of the infringer in 2003, whereby the bankruptcy spawned numerous appeals, the most notable being the US Trustee’s effort in Morse v. Ropes & Gray, LLP, 343 B.R. 376, 383-84 (D. Mass. 2006) to limit the debtor’s Chapter 11 counsel from billing Chapter 7 fees without being appointed as Chapter 7 counsel. After five years in bankruptcy the case is still open. Professor Kuney’s book is sure to add to the life of this case.

  2. PennyPolly,

    You said, “Well, I would not argue that the outcome is “so a law professor could write a treatise on the case.” I’d probably focue on the public’s likely receipt of a treatise on the case by a law professor as an outcome of lifting the protective order.”

    Thank you, some of the parties are listening. That was insightful unraveling of the kind of language courts hide behind.

    Robert White

  3. Big Hairy Rat,

    You said, “The court should have accepted the consent agreement in the first place.”

    Right. But the court didn’t want Bean to let Kuney have the documents so the court ruled that Bean had to move to dissolve the protective order, or do nothing and the court’s need to rule would be moot. The District Court would prefer to deny the outcome of the Baystate v. Bowers judgment and avoid public scrutiny. This is after all a FISA court judge.

    Why does the Fed. Cir. ruling point out that, “Before Mr. Bowers could execute on his judgment, Baystate filed for bankruptcy. “ – because the District Court refused to require Bean’s company (the infringer) to put up a bond or other security on appeal, and Bower’s got nothing for his judgment.

    Yes Big Hairy Rat, someone has taken our fair country, else it never was fair to begin with.

    Robert White

  4. Well, I would not argue that the outcome is “so a law professor could write a treatise on the case.” I’d probably focue on the public’s likely receipt of a treatise on the case by a law professor as an outcome of lifting the protective order.

  5. My point was that stipulated to facts are not usually facts based on the particular circumstances. The facts weigh heavily in favor of the public interest and that there likely are little to no articulate facts of record in favor private interest. I don’t think it really matters what is argue in District Court to dissolve the protective order beyond what you posted ’cause the District Court should be able to justify whatever conclusion it chooses to pursue.

  6. PollyPenny,
    Your insight/criticism seems relevant whether the District Court rules again without input from the parties or solicits the parties to refile their objections so it can balance the public/private interests. This is however a unique situation where the public’s interest is directly involved and represented by Professor Kuney. The public’s need to know what is in sealed documents isn’t always represented in private litigation. I don’t think a private party could as easily claim that the public has an interest in knowing what is in sealed documents. If you were the infringed upon party who won a $6 mil. judgment and the infringer went bankrupt to avoid payment of the judgment and who is now a defunct shell being dissolved by the Secretary of State how would you argue in District Court to dissolve the protective order in the copyright trial so a law professor could write a treatise on the case?
    Robert White

  7. What evidence is there to balance? If “Like most patent lawsuits, the documents filed and exchanged in the case are kept from the public – sealed under a stipulated protective order signed by the Massachusetts District Court,” then the facts on which the order is based seems likely to be based on some standard language (e.g., “we stipulate that blood will run from our eyes if the public ever found out about it”) rather than contain factual details of the trade secret business operating facts of either BayState or Bowers. Oh, let me guess. Someone may make up some “private interests” not articulated at the time the order was signed and the court will jump on those as part of the balance. Long live the king, long live the law.

  8. The CAFC didn’t lift the protective order. It only instructed the trial court to clarify its decision not to lift the protective order, given that Professor Kuney represents the public’s interest and he wants access to trial documents, not trade secrets. In this case Bowers was the undisputed original developer of the infringed upon software. Bowers won the copyright/contract trial and the judgment ballooned to $6 mil. with interest while the case was on appeal for three years. The infringer declared bankruptcy, sold all its assets to a stockholder, avoided paying $10 mil. in unsecured claims, and is now a defunct shell, supposedly without interests left to damage or protect. This is not yet an appellate decision implicating discovery of trade secrets, however it might become a decision enforcing judicial transparency.
    Here is the link the CAFC decision in this appeal: link to cafc.uscourts.gov

  9. Yes, of course the patent owner should be sanctioned, if they get caught at not disclosing evidence potentially relevant to patent invalidity or unenforeability, but there is not even any duty to do so unless they bring another lawsuit, and that duty is only to that defendant. Even then, there have been some widely reported patent suits in which patent-owner-employees did NOT tell their {new} attorneys about material evidence, and almost got away with it. I.e., it was not discovered until quite late, after a lot of expensive discovery. That is too late to be of early settlement value to anyone. Whereas leads from unsealed prior litigation depositions and documents re that same patent might be?

  10. “Some of us have always wondered how many of these sweeping and unlifted protective orders have been used to conceal discovered evidence of patent invalidity or unenforceabily from other, potentially future threatened,”

    Concealing of such evidence by the party and its lawyers in a subsequent action on the same patent (if that actually happens) should attract severe sanctions against both.

  11. I think Professor Kuney has done a good deed by getting a CAFC decision on this general issue of unlifted protective orders. Some of us have always wondered how many of these sweeping and unlifted protective orders have been used to conceal discovered evidence of patent invalidity or unenforceabily from other, potentially future threatened, parties in the more than 97% of patent suits that are settled before any trial? [Including most troll suits) [In special cases in which genuine trade secrets are actually involved, there are other ways to limit discovery or disclosure thereof.} Especially since there is a strong incentive for a defendant who has discovered such evidence to use it to obtain a much more favorable settlement than others, especially competitors, who do not.
    But I would like to see other comments on this issue.

  12. The Fed. Cir. remanded with these instructions:
    We, therefore, deem it proper to return the case to the district court for a balancing of the public and private interests in determining whether to grant or deny Professor Kuny’s motions.

    This case started as a landmark contract vs. copyright law precedent and may be on its way to becoming a First Amendment case. The trial court now has to decide whether to dissolve the protective order, or grant the stipulated agreement between the parties to allow limited access to records, or give the Fed. Cir. a better reason to affirm the trial court’s preservation of the protective order. Behind it all are the tragic stories of the parties involved with their losses of family, marriage, company, income, judgments, and claims. Professor Kuney’s book will not disappear on the shelves of academia.

  13. “a number of amici briefs argued that reverse engineering sits at the core of capitalism.”

    Say what?

    This whole thing makes no sense. Bean and Kuney settled their differences but the lower court refused to accept the settlement. Kuney goes back and advances his claim for access and Bean waves the agreement in the air and says: We’ve already settled this issue. Waste of everyone’s time. The court should have accepted the consent agreement in the first place.

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