In re POSCO (Fed. Cir. 2015)
On writ of mandamus, the Federal Circuit has vacated N.J. District Court Judge Chesler’s decision to allow confidential documents disclosed in the U.S. patent case to be used in the somewhat parallel actions in Japan and Korea.
The underlying infringement action here involves Nippon Steel suing the Korean company POSCO for infringing its patents covering a grain-oriented electrical steel strip having high magnetic flux density. (See., e.g., Patent No. 7,442,260). Additionally, Nippon Steel sued POSCO in Japan for trade secret infringement and POSCO filed a declaratory judgment action in Korea asking for a no-infringement holding.
In the U.S. lawsuit, the district court entered a discovery protective order that disclosed confidential materials ‘be used by the receiving Party solely for purposes of the prosecution or defense of this action.’ U.S. discovery rules require much more extensive disclosures than do those in Korea or Japan. Thus, when POSCO disclosed “several million pages of documents containing confidential information” in the U.S. lawsuit, Nippon Steel looked to use some of those documents in the foreign courts. In particular, Nippon Steel asked for, and the district court granted, a modification of the protective order that would allow it to use about 200 pages of documents relating to POSCO’s manufacturing process in the foreign court actions. POSCO then petitioned for a writ of mandamus to stop the disclosure.
Here, the district court relied upon the Third Circuit precedent of Pansy v. Borough of Stroudsburg, 23 F.3d 772 (3d Cir. 1994), which holds that a “party seeking to modify the order of confidentiality must come forward with a reason to modify the order. Once that is done, the court should then balance the interests, including the reliance by the original parties to the order, to determine whether good cause still exists for the order.” Based upon that holding, the district court determined that the foreign court proceeding was sufficient justification for the modification.
In its mandamus decision, the Federal Circuit found that Pansy should not be controlling but that the court should also consider 28 U.S.C. § 1782 and Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004) when determining whether to allow disclosure of confidential protected information to a foreign court.
Section 1782 provides that a U.S. district court “may order” disclosures for use in a foreign tribunal. In Intel, the Supreme Court recognized that a district court should consider “comity and parity concerns” when deciding whether to grant disclosure. In particular, there is a recognized concern that parties will “abuse” the U.S. discovery process and “attempt to circumvent foreign proof-gathering restrictions.”
On remand, the district court will “conduct the proper assessment giving due consideration to the Intel factors.”