On Monday, Judge Noreika sanctioned a patentee plaintiff for not following the protective order regarding source code.
Here is what the plaintiff did:
Plaintiff violated the Protective Order at least six times over a period of almost one year by: 1) creating an electronic copy of the source code on July 6, 2020; 2) sending that electronic copy to a vendor that had not signed the Acknowledgement and Agreement to Be Bound by Stipulated Protective Order (which actually violated two provisions of the Protective Order); 3) failing to maintain a log of all copies; 4) storing an electronic and apparently unencrypted copy of the source code on Plaintiff’s counsel’s network folder for close to one year; 5) sending the code to a second vendor that also had not signed onto the Protective Order in June of this year; and 6) failing to inform Defendant of the disclosures immediately, instead waiting ten days after the discovery, despite discussing the source code with Defendant’s counsel and with the Court at the Pretrial Conference, . . . and discussing the source code with Defendant further via correspondence . . . .
In response, the Court ordered the following sanctions:
- Attorneys fees for addressing the violation and bringing the motion (which Plaintiff agreed to)
- Return of the source code to the defendant
- Exclusion of the source code from the trial
The Court recognized that exclusion is an "extreme" sanction, but found that it was warranted in light of plaintiff's willful, bad faith and purposeful conduct:
[Plaintiff] argues that the repeated violations are “not the product of bad-faith conduct” or willfulness. . . . The Court cannot agree. Although the initial violation of the Protective Order may have been unintentional, the fact that so many individuals on the team violated so many provisions over such an extended period of time shows a flagrant disregard for their duty to understand and abide by the Protective Order and is hardly suggestive of good faith. Nor is the apparently complete disregard of the logging requirement, which, had it been followed, may have alerted more senior team members to the problems earlier. Finally, the Court finds Plaintiff’s failure to inform Defendant of the disclosure “immediately” to be particularly troubling and, indeed, willful and in bad faith. For ten days after the discovery of violations, despite discussing the source code with Defendant and with the Court at the Pretrial Conference and discussing the source code with Defendants further via correspondence, Plaintiff remained silent. Counsel understood that the violations discovered were a serious matter. Indeed the violations apparently caught the immediate attention of “senior team members” when uncovered. The violations surely were at the forefront of counsel’s mind. And it is simply not credible to posit that Plaintiff’s counsel did not purposely withhold the information about the violations in the ten days between discovery and disclosure (particularly when discussing other source code issues with Defendant).
The takeaway is: don't mess around when it comes to source code. Source code production is an issue that comes up in most big software patent cases, and in my experience attorneys almost always scrupulously follow the protective order when it comes to anything involving source code. But this case will definitely prove useful if someone fails to do so.
You may want to bookmark this!
We missed this opinion when it came out on Monday, because it didn't show up on the Court's website. It also hasn't made LexisNexis yet, even though it was mentioned in Law360. I've noticed LexisNexis seems to miss opinions that don't show up on the website immediately, so it may never make it there.
In other words, keep this opinion in mind if you have a similar issue down the line!