On April 17, 2012, Judge Means granted the plaintiffs’ motion for sanctions in Par Systems v. iPhoton Solutions after defendants’ counsel violated the prosecution bar of the protective order. (Order available here.) In patent infringement cases, Courts routinely enter protective orders prohibiting attorneys from prosecuting patents in the same field as the opposing party’s confidential materials (to prevent the receiving attorney from using such confidential materials to draft patent claims).
In the instant case, defendants’ counsel violated the prosecution bar of the protective order by prosecuting a patent application before the Patent and Trademark Office. Defendants’ counsel wrote to plaintiffs:
I will not mince words: I violated the prosecution bar in the Court’s protective order. As set forth below, that violation was inadvertent, not intentional. [Plaintiffs] should also not mince words: there was no misuse of [Plaintiffs’] confidential information nor advantage gained by access to such information. There must be, and already has been, consequences for my mistake. . . .
To be clear, the fact that no confidential information was used in any way does not excuse my actions. I did not comply with the order and consequences are appropriate. Those consequences must be commensurate with the violation. There must be a difference between going 10 miles over the posted speed limit and drunk driving.
Based on this admitted violation of the protective order, plaintiffs filed a motion for sanctions. Defendants’ counsel agreed to withdraw as litigation counsel, and defendants argued that no additional sanctions should be imposed. Plaintiffs, on the other hand, asked the Court to strike Defendants’ defenses to plaintiffs’ claim for transfer of ownership of the relevant patent or to prevent defendants from asserting any patent issuing from the relevant application against them. Plaintiffs also requested an award of reasonable expenses, including attorney’s fees, arising from investigating and filing the motion for sanctions.
The Court found:
The parties essentially are asking for relief sitting at either end of the sanctions spectrum: impose the equivalent of death-penalty sanctions on Defendants for their inadvertent violation of the prosecution bar or conclude there was “no harm, no foul” and let the case proceed undisturbed without [defendants’ counsel] as litigation counsel. Both solutions seem extreme. . . .
Because the parties have requested only the extremes on the sanctions continuum, the Court is ill prepared to craft a suitable, mid-continuum remedy for the violations of the prosecution bar. . . .
Thus, the Court ORDERS the parties’ counsel to meet in person at a time and place of their choosing but in no event later than May 11 2012, to negotiate such mid-continuum remedy and the amount of expenses, including attorney’s fees, that the defendants and/or their counsel must pay. If, after the parties’ counsel have made a good-faith effort to reach a compromise agreement as to such remedy and expenses, no agreement has been reached, the plaintiff must so inform the Court by notice filed of record and the Court will set the matter for hearing on a day to be determined at that time. At such hearing, each side will have one hour for presentation of evidence and/or oral argument.
Additionally, the Court ruled that defendants and their counsel, jointly and severally, must pay plaintiffs’ reasonable expenses (including attorney’s fees) incurred in seeking sanctions.
Plaintiffs are represented by Robert Mow, Jr., Kim Askew, Michael Murphy, Michael Osterhoff, and Suzanne Konrad, all of K&L Gates LLP; and Benjamin Setnick, of Andrews Kurth LLP.
Defendants are represented by John Emerson, Thomas Williams, and Travis DeArman, all of Haynes & Boone LLP; and Sarah Paxson, of Thompson & Knight LLP. (None of these attorneys was the attorney who violated the protective order. We have not named that attorney in this post.)