Case 2:07-cv TJW Document 322 Filed 06/09/2009 Page 1 of 29

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1 Case 2:07-cv TJW Document 322 Filed 06/09/2009 Page 1 of 29 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS MARSHALL DIVISION WI-LAN, INC. v. ACER, INC., et al. WI-LAN, INC. v. WESTELL TECHNOLOGIES, INC., et al. CIVIL ACTION NO. 2:07-CV-473[TJW] CONSOLIDATED WITH: CIVIL ACTION NO. 2:07-CV-474[TJW] JURY TRIAL REQUESTED JOINT MOTION FOR ENTRY OF PROTECTIVE ORDER Plaintiff Wi-LAN, Inc. and Defendants jointly request that the Court enter a Stipulated Protective Order in this case. The parties have spent considerable time discussing the provisions of the attached order and have compromised and resolved all disputes but one, that is, Wi-LAN's proposed "Employee Bar" provision, which concerns whether Defendants' in-house attorneys may have access to Wi-LAN's documents relating to Wi-LAN's ongoing research and development and its current and future business plans and strategies. Wi-LAN's proposed draft of the Protective Order is attached as Exhibit A. Defendants' proposed draft of the Protective Order is attached as Exhibit B. For the Court's convenience, a blacklined comparison of the two versions is attached as Exhibit C. For the Court's consideration, the parties submit below the two portions of the protective order where this one remaining issue arises, and have highlighted in JOINT MOTION FOR ENTRY OF PROTECTIVE ORDER - PAGE 1 Dallas v1

2 Case 2:07-cv TJW Document 322 Filed 06/09/2009 Page 2 of 29 bold the text that Wi-LAN seeks to retain, but that Defendants seek to delete. 1 Following these two portions are Wi-LAN's and Defendants' arguments in support of their respective positions. 7. "ATTORNEYS' EYES ONLY SUBJECT TO EMPLOYEE BAR" OR "SUBJECT TO PROSECUTION BAR": these designations may be used only for ATTORNEYS' EYES ONLY information, documents, and things the Designating Party believes in good faith would create a substantial risk of serious injury if known to in-house attorneys or other employees of a Receiving Party, including, but not limited to, among the following categories of documents: (a) a Designating Party's source code and other technical documents describing the structure and operation of the Designating Party's products; (b) a Designating Party's research and development activities; and (c) a Designating party's business planning, development, and strategy documents. These designations, however, shall not be used for a Designating Party's sales records regarding its products, license agreements or related communications with parties to the agreements. In addition, the ATTORNEYS EYES ONLY - SUBJECT TO EMPLOYEE BAR designation shall not be used for any document created prior to January 1, ~ and ~ 16. "ATTORNEYS' EYES ONLY" Material and "ATTORNEYS' EYES ONLY SOURCE CODE" Material: Unless otherwise ordered by the Court or permitted in writing by the Designating Party, a Receiving Party may disclose any information, documents or things designated "ATTORNEYS' EYES ONLY" or "ATTORNEYS' EYES ONLY SOURCE CODE" Material only to the following, in addition to those identified in Paragraphs below regarding use of Designated Material at depositions: (a) Persons who appear on the face of Designated Material as an author, addressee or recipient thereof; (b) (c) Counsel of Record; For "ATTORNEYS' EYES ONLY" material: With respect to a Receiving Party, up to three (3) in-house attorneys (including inhouse foreign patent attorneys) of each Receiving Party or their respective parent companies, and necessary secretarial staff, having responsibility for providing oversight of or assistance in the litigation, provided that each such attorney must 1 The parties have also highlighted surrounding text that would have to be modified should the Court agree with Defendants. JOINT MOTION FOR ENTRY OF PROTECTIVE ORDER - PAGE 2 Dallas v1

3 Case 2:07-cv TJW Document 322 Filed 06/09/2009 Page 3 of 29 keep all such documents and information in segregated files access to which is restricted to the designated attorney and necessary secretarial staff. The designated in-house attorneys will not have access to any information about any Defendant Producing Party's current or future products that are not accused of infringement in this case and further provided that Defendants' Receiving Party attorneys shall be allowed to review only ATTORNEYS' EYES ONLY information produced by Wi-LAN and that under no circumstances shall Defendants' in-house attorneys or employees be permitted access to or be allowed to review ATTORNEYS' EYES ONLY information produced by any other Defendant, unless so authorized by the Producing Party. Nothing in this section restricts designated in-house attorneys' access to information concerning their own companies' current or future products. The "Acknowledgement and Agreement To Be Bound By Protective Order" attached hereto as Exhibit A must be executed by each such attorney and provided to all parties prior to receiving Designated Material. Defendant Buffalo Technology (USA), Inc., which does not have in-house counsel, may substitute up to two (2) employees and their necessary secretarial staff of Buffalo, Inc. or its parent company having responsibility for providing oversight of or assistance in the litigation, who have signed the "Acknowledgement and Agreement To Be Bound By Protective Order" attached hereto as Exhibit A, and provided an executed copy to all parties prior to receiving Designated Material. The substituted employees shall have the same duties and obligations of in-house counsel who are designated under this paragraph. Defendants Sony Electronics, Inc. and Sony Computer Entertainment America, Inc. may each substitute up to two (2) employees of their parent companies and their necessary secretarial staff having responsibility for providing oversight of or assistance in the litigation, who have signed the "Acknowledgement and Agreement To Be Bound By Protective Order" attached hereto as Exhibit A, and provided an executed copy to all parties prior to receiving Designated Material. The substituted employees shall have the same duties and obligations of in-house counsel who are designated under this paragraph; With respect to Designated Material from third parties or for which third party permission is required for production, absent a court order or agreement of the third party, such Designated Material may not be disclosed to employees of a Receiving Party; This subparagraph (c) does not apply to "ATTORNEYS' EYES ONLY SOURCE CODE," "ATTORNEYS' EYES ONLY SUBJECT TO EMPLOYEE BAR" OR "SUBJECT TO PROSECUTION BAR." JOINT MOTION FOR ENTRY OF PROTECTIVE ORDER - PAGE 3 Dallas v1

4 Case 2:07-cv TJW Document 322 Filed 06/09/2009 Page 4 of 29 I. Wi-LAN's Argument in Support of Its Proposal The parties have agreed to a Protective Order with an ATTORNEYS' EYES ONLY designation that limits access to a party s confidential documents to outside counsel and up to three in-house counsel for Wi-LAN and for each of the nineteen defendants. See Exhibit A, 5, 16. In addition, as reflected in the above-quoted portions of the Protective Order, Wi-LAN has also agreed to place certain further restrictions on its in-house counsel, preventing access to (i) Defendants source code and other technical documents describing the structure and operation of Defendants products, (ii) Defendants research and development activities, and (iii) Defendants business plans and strategies, including for its products and intellectual property. See, e.g., 7 (a), (b), and (c) (an "ATTORNEYS' EYES ONLY - PROSECUTION BAR" designation). Wi- LAN agreed to these restrictions to facilitate entry of a protective order and to address Defendants concern that such information could potentially be used (even inadvertently) to further strengthen Wi-LAN s intellectual property position with respect to Defendants. Wi-LAN agreed to these additional restrictions, however, with the expectation that Defendants would reciprocate by similarly limiting their in-house counsel s access to Wi-LAN s confidential documents that could be used (even inadvertently) to strengthen Defendants intellectual property position with respect to Wi-LAN, including its ability to defend against, settle, or otherwise compete with Wi-LAN s current and any future intellectual property claims. The remaining dispute between the parties is thus focused on whether defendants' inhouse counsel should be permitted access to Wi-LAN's current and future research and development activities and its current and future business plans and strategies, while Wi-LAN s in-house counsel are denied that same level of access to Defendants documents. What is good for the goose, should be good for the gander. While Defendants may contend otherwise, the JOINT MOTION FOR ENTRY OF PROTECTIVE ORDER - PAGE 4 Dallas v1

5 Case 2:07-cv TJW Document 322 Filed 06/09/2009 Page 5 of 29 reality is that such information is as sensitive to Wi-LAN as it is to Defendants because it can be used (even inadvertently) to enhance Defendants ability to defend against, settle, or otherwise compete with Wi-LAN s current and future intellectual property rights. Specifically, Wi-LAN seeks the inclusion of a designation "ATTORNEYS' EYES ONLY - SUBJECT TO EMPLOYEE BAR" in paragraphs 7 (a definitional section) and 16(c) to make it clear -- as it is for the "ATTORNEYS' EYES ONLY - PROSECUTION BAR" designation (which applies only to Wi- LAN s in-house counsel and other employees) -- that each defendant s three in-house attorneys permitted to see Wi-LAN s "ATTORNEYS' EYES ONLY" designated materials not be permitted access to this particularly sensitive Wi-LAN information. Wi-LAN thus does not seek an absolute ban on in-house counsel receiving documents, or the creation of a per se distinction between in-house and outside counsel, as Defendants suggest below. 2 Rather, Wi-LAN seeks a limited and reciprocal exception to protect access to its documents that reflect its current and future research and development activities as well as its current and future business plans and strategies. These narrowly defined Wi-LAN documents are not relevant to the substance of the ongoing dispute and a limitation on access to these documents by in-house attorneys would not prejudice Defendants' ability to prosecute this litigation or engage in meaningful settlement discussions. Other than these documents, Defendants' in-house counsel would have complete and unfettered access to Wi-LAN's documents and indisputably have access to everything they could possibly need to manage the 2 Defendants seek to distract the Court from the issue by quarrelling over whether it is appropriate to treat inhouse and outside counsel differently. Defendants themselves have already agreed that such disparate treatment is appropriate in these circumstances. See, e.g., Exh. B, 7 (limiting definition of SUBJECT TO PROSECUTION BAR to in-house attorneys or other employees of a Receiving Party ). JOINT MOTION FOR ENTRY OF PROTECTIVE ORDER - PAGE 5 Dallas v1

6 Case 2:07-cv TJW Document 322 Filed 06/09/2009 Page 6 of 29 litigation and make appropriate settlement determinations regarding the matters being litigated in this suit. 3 By contrast, as discussed above, the Protective Order already provides Defendants with broader protections against access by Wi-LAN's in-house counsel than Wi-LAN seeks to impose on defendants' in-house counsel. Because of the nature of its business, each of Wi-LAN's inhouse attorneys managing this litigation are arguably involved in some manner in the prosecution of its patent applications. As such, while the literal words of the Protective Order appear to permit access by Wi-LAN s in-house counsel to defendants' ATTORNEYS' EYES ONLY information (just like defendants), as Defendants well know (because of the nature of Wi- LAN s current business) the "ATTORNEYS' EYES ONLY SUBJECT TO PROSECUTION BAR" designation takes that access away, preventing access by Wi-LAN's in-house attorneys to Defendants' documents relating to their research and development efforts, as well as their past, present and future business plans and strategies, not just Defendants source code and other documents describing the structure and operation of Defendants products. Federal Rule of Civil Procedure 26(c) authorizes courts to protect parties from "undue burden or expense" by ordering "that a trade secret or other confidential research, development, or commercial information not be disclosed or be disclosed only in a designated way." See also Brown Bag Software v. Symantec Corp., 960 F.2d 1465, 1470 (9th Cir. 1992) (affirming district court's denial of access by in-house counsel to its adversary's information). In evaluating this issue, courts apply a balancing test that weighs the risk of inadvertent disclosure (such as the potential for irreparable harm to the disclosing party and the potential for inadvertent disclosure) 3 Wi-LAN does not understand how Defendants can claim, as they do, that this limitation could be used to prevent Defendants in-house attorneys from reviewing litigation briefs. JOINT MOTION FOR ENTRY OF PROTECTIVE ORDER - PAGE 6 Dallas v1

7 Case 2:07-cv TJW Document 322 Filed 06/09/2009 Page 7 of 29 against the risk of impairing the litigation by denying access to in-house counsel (including the party's need for in-house access to the information). See id. at In addition to these risks, courts evaluate whether the people receiving the information are involved in related scientific research or in competitive decisionmaking 4, the timing of the remedy and its scope. See ST Sales Tech Holdings, LLC v. Daimler Chrysler Co., LLC., 2008 WL , *2 (E.D. Tex. March 14, 2008) (citing U.S. Steel Corp. v. United States, 730 F.2d 1465, 1468 n.3 (Fed. Cir.1984) and Infosint S.A. v. H. Lundbeck A.S., 2007 WL , at *3 (S.D.N.Y. 2007)). Thus, while courts may not favor across-the-board restrictions on access by in-house counsel, see, e.g., U.S. Steel, 730 F.2d at 1468, they evaluate the propriety of such per se restrictions to certain information on a case-by-case basis within the context of the protections and distinctions already negotiated by the parties to protect their competing interests. Id. The fact that the parties in this case are not product competitors in the traditional sense does not change the balancing test because the documents nonetheless reflect competitive information. Indeed, the parties compete for the right to control use of the wireless technologies at issue in this litigation. Thus, discovery of Wi-LAN s business plans and strategies for strengthening its intellectual protection in these areas or related areas through ongoing and future research activities, and through the development and acquisition of additional intellectual property rights, is information that indisputably could be used by defendants to undermine or otherwise compete with these efforts by Wi-LAN. Indeed, in-house counsel responsible for 4 Although determining whether the in-house counsel is a competitive decisionmaker is one factor in denying access, see ST Sales, 2008 WL *3 ( the oft-cited most critical factor weighing in favor of denial of access ) (emphasis added)), it is not the sole inquiry, id. at n.5, as Defendants would have this Court believe. Although the ST Sales court notes that plaintiff is in the business of acquiring, licensing, and enforcing patents (id. at *1), its analysis as to who can be a competitor, or whether the opposing party s in-house counsel can be a competitive decisionmaker such that disclosure creates the potential for damaging use, does not turn on plaintiff s business model. JOINT MOTION FOR ENTRY OF PROTECTIVE ORDER - PAGE 7 Dallas v1

8 Case 2:07-cv TJW Document 322 Filed 06/09/2009 Page 8 of 29 managing the defense and settlement of Wi-LAN s intellectual property claims in this litigation (because of the very nature of their role in the company and in this litigation) are in a competitive decision making position vis a vis Wi-LAN and its intellectual property as it is their job to see that the company is successful in competing with Wi-LAN regarding intellectual property rights. In this district, Magistrate Judge Love explained that competition over intellectual property rights is sufficient to make two parties competitors: Moreover, it is somewhat disingenuous to argue Sales Tech is not Defendants' competitor simply because Sales Tech is in the business of acquiring and enforcing patents, while Defendants manufacture and design automobiles. Plaintiff and Defendants all seek to utilize, in one manner or another, intellectual property as part of a business model for pecuniary gain. The fact that Sales Tech is before the Court seeking to enforce its attained intellectual property, and has sued on similar patents against these same Defendants on the same systems many times before, indicates Sales Tech views Defendants as competitors for the rights to use the accused systems. To the extent Sales Tech and Defendants are not direct competitors in the traditional understanding of the term, competitor status is not the sole relevant inquiry, and it certainly is not determinative of the matter. See MGP Ingredients, Inc. v. Mars, Inc., 245 F.R.D. 497, (D. Kan. 2007). ST Sales, 2008 WL , *6. 5 A. The Risks Resulting From Disclosure Are Too High in This Case Wi-LAN is a pioneer in the design and development of wireless technologies and products. In the early 1990s, its founders invented the basic technology that makes possible the Wi-Fi and Wi-MAX capabilities in notebooks, routers, and handsets: wideband orthogonal frequency division multiplexing ("wideband OFDM"). In exchange for disclosing its' inventions to the public, Wi-LAN sought and was granted patent protection. Wi-LAN also introduced the 5 Regardless, parties need not be competitors for there to be a competitive decisionmaker who should be denied access. See, e.g., R.R. Donnelley & Sons Co. v. Quark, Inc., 2007 WL 61885, at *2 n. 2 (D. Del. 2007) (rejecting the notion that the parties must be "direct competitors" for the sensitive information to have value and access to be denied). JOINT MOTION FOR ENTRY OF PROTECTIVE ORDER - PAGE 8 Dallas v1

9 Case 2:07-cv TJW Document 322 Filed 06/09/2009 Page 9 of 29 first ever product incorporating this technology in the 1990s and a series of follow-on products that popularized W-OFDM as the choice for all existing and future wireless data networks (which it indisputably has now become). Wi-LAN also worked to obtain FCC permission for the use of such technology in the United States, enabling the markets for Wi-Fi and Wi-Max markets from which defendants now profit. (See Intel White Paper: WiMAX and Wi-Fi Together: Synergies for Next-Generation Broadband, DI# at 3-4: The IEEE and IEEE standards are referred to as Wi-Fi and WiMAX, respectively. The most widespread Wi-Fi technology being shipped today is IEEE g, which is based on orthogonal frequency division multiplexing (OFDM). Common underlying technologies of OFDM and MIMO between WiMAX and Wi-Fi technologies enables the sharing of silicon blocks. ) In 2006, Wi-LAN focused its business on developing and licensing its patented inventions and it maintains ongoing technology research and development activities. To date, Wi-LAN has licensed 65 companies to use its patented wireless technologies for building Wi-Fi and Wi-MAX products, including large brand-named companies such as Cisco, Fujitsu, Matsushita, and Nokia. Because Defendants use, but have chosen not to pay to license Wi- LAN's patented technologies, Wi-LAN reluctantly (after several years of licensing efforts) has been forced to adopt a business strategy that includes litigation to protect its' property rights as well as the on-going value of its existing licenses. As a result, Wi-LAN's on-going business planning and strategy documents are focused on its intellectual property development, acquisition, licensing, and litigation strategies, and its research and development activities. These documents evaluate the legal, technical and financial issues between the various companies from competitive perspectives. These documents reflect highly sensitive information in the same way that a product manufacturer would have documents reflecting future product JOINT MOTION FOR ENTRY OF PROTECTIVE ORDER - PAGE 9 Dallas v1

10 Case 2:07-cv TJW Document 322 Filed 06/09/2009 Page 10 of 29 designs, customer plans and marketing strategies, and less restricted access to them will undoubtedly help Defendants to better compete against Wi-LAN or its licensees. Wi-LAN does not want these documents to find their way into the hands of its competitors, so as not to educate its litigation opponents about its on-going and future intellectual property business plans and its litigation strategy. Similarly, Wi-LAN does not want documents reflecting its on-going research and development efforts to find their way into the hands of the very same litigants who have demonstrated that they are willing to use Wi-LAN's technology without proper compensation. In this case, the parties desire to have their in-house counsel who are managing this litigation see a much broader group of documents than those that would be available to them under a standard ATTORNEYS' EYES ONLY designation. Thus, the parties have rejected a single tiered protective order, in favor of multiple tiers, to protect against the risks from disclosure of trade secrets and other highly confidential information thus distinguishing this case from MGP Ingredients v. Mars, Inc. 245 F.R.D. 497 (D. Kan. 2007) (multi-tier protective order designed to permit in house technical staff access to certain technical documents), and Turic v. Yamah Motor Corp., 121 F.R.D. 32, 35 (S.D.N.Y. 1988) (concerning disclosure to opposing party of documents generally). 6 To protect against other risks from disclosure of confidential information, Wi-LAN has agreed to certain general restrictions on its in-house attorneys. However, Defendants refuse to address Wi-LAN s concern that Defendants' own inhouse attorneys do not have reciprocal restrictions and may use, even if inadvertently, 6 Similarly, this case is even further afield from Defendant s cited cases Gulf Oil Co. v. Bernard, 452 U.S. 89, 102 n.16 (1981) (concerning speech between parties and potential class members); In Re Terra Int'l, Inc., 134 F.3d 302, 306 (5th Cir. 1998) (concerning prejudice from fact witnesses having access to disclosed information); and United States v. Exxon Corp., 94 F.R.D. 250, 251 (D.D.C. 1981) (concerning disclosure to the public). JOINT MOTION FOR ENTRY OF PROTECTIVE ORDER - PAGE 10 Dallas v1

11 Case 2:07-cv TJW Document 322 Filed 06/09/2009 Page 11 of 29 knowledge of Wi-LAN s research activities and its intellectual property business planning and strategies when advising their respective employers about continued litigation of this matter, settlement, 7 and ways to defend against/undermine Wi-LAN s current and future intellectual property claims. This is not a case where Wi-LAN is arguing that Defendants in-house lawyers are more likely to breach the protective order than Defendants outside attorneys, as Defendants suggest. Wi-LAN merely seeks to protect a narrowly-focused group of sensitive documents using restrictions parallel to those Defendants have already argued should be applied to Wi-LAN and for exactly the same reasons. Given the nature of this case, Wi-LAN does not believe it is possible for Defendants attorneys to erect a wall within their own minds, such that they can use certain of Wi-LAN's information while evaluating the merits of this action and advising management regarding settlement, but not use Wi-LAN s business plans and strategies regarding this litigation, settlement, and growing and strengthening its research activities and intellectual property licensing business to improve their settlement position or to defend against, undermine, or otherwise compete against Wi-LAN s current and future intellectual property claims (which is the reason that Wi-LAN agreed to defendants' request to prevent the similar access to Wi-LAN's in-house counsel of a much broader scope). Courts have approved such restrictions in exactly these circumstances. See Brown Bag, 960 F2d at 1470; U.S. Steel Corp. v. United States, 730 F.2d 1465, (Fed. Cir. 1984) ("It is humanly impossible to control the inadvertent disclosure of some of this information in any prolonged working relationship."). In a case 7 While Wi-LAN favors access to documents that aid in realistic appraisals of the case or that better inform settlements, see infra at 22, such access should not include a party s own strategy, appraisals, or plans for settlement. If it did, such access would most appropriately be reciprocal. JOINT MOTION FOR ENTRY OF PROTECTIVE ORDER - PAGE 11 Dallas v1

12 Case 2:07-cv TJW Document 322 Filed 06/09/2009 Page 12 of 29 involving one of the defendants in this case, the court found that if Intel s in-house counsel obtained confidential information, she would be in the impossible position of having to refuse her employer legal advice so that she did not risk improperly or indirectly revealing the defendant's trade secrets. Intel Corp. v. Via Technologies, Inc., 198 F.R.D. 525, 531 (N.D. Cal. 2000) ("good intentions are insufficient to prevent inadvertent disclosure of confidential information because it is not possible for counsel to 'lock-up trade secrets in [her] mind,' as the Court in Brown Bag, observed"). Thus, although not the only factor weighed by the courts, where in-house counsel is involved in "competitive decisionmaking" the risk of disclosure may outweigh the need for confidential information. See Brown Bag, 960 F.2d at 1470; U.S. Steel, 730 F.2d at 1468; and Intel, 198 F.R.D. at 529. Because Wi-LAN is in the business of developing and enforcing its intellectual property rights, and does not currently manufacture competing products offered for sale, in this particular case Defendants' in-house lawyers are more directly a part of their companies' competitive decisionmaking process than they would be in the typical litigation, such as Intel v. Via, and those referenced by Defendants in Exhibits D and E. Here, Defendants must rely more heavily on the litigation advice and understanding of their in-house litigation counsel in making competitive decisions regarding the continued use of Wi-LAN s intellectual property or how to minimize the risk of future claims by Wi-LAN, because they better and perhaps uniquely within their companies understand the legal and financial considerations and motivations underlying Wi-LAN's particular decisionmaking. Should Defendants' in-house attorneys have an understanding of Wi-LAN's current internal patent litigation, licensing, and settlement strategies from Wi-LAN's own recent documents, it will be impossible for these in-house attorneys to avoid even inadvertent disclosure of such confidential information in developing their own JOINT MOTION FOR ENTRY OF PROTECTIVE ORDER - PAGE 12 Dallas v1

13 Case 2:07-cv TJW Document 322 Filed 06/09/2009 Page 13 of 29 business plans and strategies, which are focused on defending against, undermining, and otherwise competing against Wi-LAN s claims. The circumstances of this case thus warrant broader protections than Intel v. Via, which involved product competitors, where the Northern District of California denied Intel's in-house counsel access to certain of VIA's documents as follows: In her declaration, Ms. Fu states that in her role as Senior Counsel in the Intel litigation group, she manages "intellectual property litigation as well as other general commercial litigation and legal disputes." Her involvement in intellectual property licensing is limited to "the extent that it resolves litigation or a legal dispute." At the evidentiary hearing, however, it became evident that Ms. Fu is involved in types of decisionmaking that create an unacceptable risk of disclosure. Ms. Fu's involvement in licensing through litigation constitutes competitive decisionmaking, because her advice and counsel necessarily affect licensing decisions. Ms. Fu testified that as Senior Counsel she is actively involved in negotiating the terms of licensing agreements as part of settling lawsuits. Ms. Fu estimates that two-thirds of intellectual property suits brought by Intel settle with licensing agreements as part of the settlement. In evaluating these agreements, Ms. Fu testified she evaluates the strength of the patent, Intel's products implicated by the patent, and competitors' products implicated by the patent. Ms. Fu further also testified that licensing agreements reached as part of settlements directly affected Intel's competitiveness in the market by affecting Intel's ability to sell products. These activities would put Ms. Fu in the untenable position of having either to refuse to offer crucial legal advice at times or risk disclosing protected information. See Brown Bag, 960 F.2d at Confidential information in this case may provide Intel a competitive advantage in negotiating related licenses in the future. Intel, 198 F.R.D. at (internal declaration citations omitted). Here, as in Intel, "even a seemingly insignificant risk of disclosure cannot be ignored due to the threat of significant potential injury," namely the injury arising from Defendants' ability to interfere with Wi-LAN s business plans and strategies intended to further strengthen its current and future intellectual property position with respect to defendants, and thereby gain a competitive advantage in the marketplace and the litigation. See Intel, 198 F.R.D. at 531. Such JOINT MOTION FOR ENTRY OF PROTECTIVE ORDER - PAGE 13 Dallas v1

14 Case 2:07-cv TJW Document 322 Filed 06/09/2009 Page 14 of 29 harm would be irreparable, as it would be impossible for the in-house attorney to unlearn the knowledge before it is used (especially where it is used inadvertently), and it would be impossible to restore the market or the litigation to the condition that existed prior to improper use of the confidential information. B. There Is No Need For Defendants In-House Counsel to Have Access to This Information In contrast to these substantial risks, Defendants cannot establish a need for their in-house counsel to access these documents. In assessing a party's need for access to a document by its inhouse attorney, courts evaluate whether protecting the document actually prejudices presentation of the party's case, not whether it merely makes managing the litigation more difficult. See Intel, 198 F.R.D. at 528, 529 (quoting A. Hirsh Inc., 657 F. Supp. at 1305 ("in view of retained counsel's competence, it is not clear how plaintiff s position will be prejudiced by excluding [inhouse] counsel from access")); see also Brown Bag, 960 F.2d at 1471 (holding party's contention that in-house counsel needed access to information to manage the case was not sufficient to overcome the risk of inadvertent disclosure). Here, Defendants are all well represented by competent outside counsel, thus it is difficult to see how Defendants will be prejudiced. See ST Sales Tech Holdings, LLC v. Daimler Chrysler Co., LLC, 2008 WL , *8 (E.D. Tex. 2008). This is not an instance where outside counsel cannot handle the specialized technical nature of the case, see, e.g., MGP Ingredients v. Mars, Inc. 245 F.R.D. 497 (D. Kan. 2007) (rejecting two tier protective order to permit in house technical staff to evaluate technology); Carpenter Technology Corp. v. Armco, Inc., 132 F.R.D. 24, 28 (E.D. Pa. 1990), where outside counsel lack experience, see, e.g., Volvo Penta of the Americas, Inc. v. Brunswick Corp., 187 F.R.D. 240, (E.D. Va. 1999), or where counsel have changed late in the litigation, see, e.g., U.S. Steel Corp. v. United States, 730 F.2d 1465, 1468 (Fed. Cir. 1984). In fact, the Brown JOINT MOTION FOR ENTRY OF PROTECTIVE ORDER - PAGE 14 Dallas v1

15 Case 2:07-cv TJW Document 322 Filed 06/09/2009 Page 15 of 29 Bag court specifically rejected a party's contention that its in-house attorney needed access to confidential information in part because its outside counsel had withdrawn from the litigation. Brown Bag, 960 F.2d at 1471 (the protective order provided access to these documents through an "independent consultant, legal or otherwise"). Providing the reciprocal restriction that Wi-LAN seeks is unlikely to hinder efficient and effective representation of the Defendants. By the terms of paragraph 7 of the Protective Order, the employee bar would be limited such that it "shall not be used for a Designating Party's sales records regarding its products, license agreements or related communications with parties to the agreements." 8 See Exhibit A, 7. Thus, the provision is not unduly broad. Further, the parties have also agreed that Wi-LAN would not use this designation for documents prior to 2006, thereby not withholding access by Defendants' in-house counsel to Wi-LAN's materials from time periods relevant to the substantive issues in this litigation. It is difficult to see how Wi-LAN's on-going research and development documents or its recent business and strategy related documents (from 2006 to present) are relevant to the subject matter of the present litigation, let alone are so material that Defendants' in-house counsel need to see these documents to present their case effectively. 9 Defendants have not articulated any reason why its in-house counsel need access to these documents other than to insinuate that Wi-LAN could potentially use the Protective Order to wall-off in-house counsel from litigation 8 This language would provide Defendants' in-house counsel with external communications and license agreements between Wi-LAN and other companies, but it would not provide them with access to Wi-LAN's own internal business planning and strategy documents related to licensing and settlement efforts, which could be used to alter -- in Defendants' favor -- the very same strategic circumstances they were intended to help Wi-LAN navigate. 9 Certainly even with this additional designation Defendants' in-house counsel will have access to a broader range of documents than will Wi-LAN's in-house counsel due to the "ATTORNEYS' EYES ONLY SUBJECT TO PROSECUTION BAR" designation. JOINT MOTION FOR ENTRY OF PROTECTIVE ORDER - PAGE 15 Dallas v1

16 Case 2:07-cv TJW Document 322 Filed 06/09/2009 Page 16 of 29 briefs. In contrast and as described above, the risk of improper use of this limited category of confidential and highly sensitive information, even if inadvertent, strongly weighs in favor of providing a provision in the Protective Order to limit such risk. C. Conclusion For the foregoing reasons, Wi-LAN respectfully request that the Court enter its version of the proposed Protective Order attached as Exhibit A, and deny Defendants request for the Court to enter Defendants "Employee Bar" provision presented in their version of the Protective Order attached as Exhibit B. II. Defendants' Argument in Support of Defendants' Proposal Defendants respectfully request that the Court enter Defendants' version of the proposed Protective Order attached as Exhibit B, and deny Wi-LAN's request for entry of its version of the Protective Order with its proposed "Employee Bar" provision. The parties negotiated the terms of the proposed Protective Order for over a year without Wi-LAN even once raising its "Employee Bar" provision, or, for that matter, any concerns over the documents it now contends must be withheld from defendants' in-house counsel. Now, with all other terms agreed upon, Wi-LAN inserts an "Employee Bar" restriction, arguing that inhouse access to non-privileged documents concerning its core business, patent acquisition and licensing, would interfere with Wi-LAN's efforts to license Defendants in this lawsuit and potential future enforcement activities. But such a "per se" restriction on all in-house counsel would jeopardize in-house counsel's ability to effectively manage this litigation, an ability that the Federal Circuit explicitly preserved in U.S. Steel Corp. v. United States by prohibiting such per se bans on in-house counsel's access to sensitive information exchanged in litigation. U.S. Steel Corp. v. United States, 730 F.2d 1465, 1469 (Fed. Cir. 1984). Rather, U.S. Steel requires JOINT MOTION FOR ENTRY OF PROTECTIVE ORDER - PAGE 16 Dallas v1

17 Case 2:07-cv TJW Document 322 Filed 06/09/2009 Page 17 of 29 courts to examine the specific duties of particular counsel sought to be excluded by looking specifically at "the factual circumstances surrounding each individual counsel's activities, association, and relationship with a party" and placing the burden on the disclosing party to demonstrate that individual counsel could not be entrusted with confidential material. See id.; ST Sales Tech v. Daimler Chrysler Co., 2008 WL at *2 (E.D. Tex.) (quoting U.S. Steel at 1468 n.3). The issue is not solely whether the materials to be disclosed are sensitive, but rather whether the recipient's particular role at the company creates a risk of inadvertent disclosure. Wi-LAN focuses on the former, without any analysis of defendants' in-house counsel or their respective responsibilities. Instead of the particularized analysis required under U.S. Steel, Wi-LAN attempts to globally cast Defendants' in-house counsel as "competitors" because information concerning Wi- LAN's licensing practices would permit Defendants to "enhance Defendants' ability to defend against, settle, or otherwise compete with Wi-LAN's current and future intellectual property rights." 10 Supra at 5. But defending against patent infringement claims and participating in settlement discussions alone does not justify barring in-house counsel from access. Wi-LAN's broad-brush proposal would exclude defendants' in-house counsel whose job responsibilities are limited to pure litigation management roles within their respective companies, a category of attorneys to which courts routinely grant access to confidential information, even with respect to direct, head-to-head competitors in the marketplace. In fact, at least one such in-house attorney in this litigation has already been deemed by two courts, including this one, not to be a 10 Although Wi-LAN broadly surmises that defendants' in-house counsel will likely disclose information that will enable defendants to compete against it, Wi-LAN fails to set forth particular facts demonstrating a likelihood of inadvertent disclosure or provide examples of "competitive" situations where disclosures might occur beyond defending or settling litigation. JOINT MOTION FOR ENTRY OF PROTECTIVE ORDER - PAGE 17 Dallas v1

18 Case 2:07-cv TJW Document 322 Filed 06/09/2009 Page 18 of 29 "competitive decision-maker" under particularized and detailed U.S. Steel analyses. As Wi-LAN would have it, Defendants' in-house counsel who have been permitted access to competitor documents by two federal courts would be unable to access information from Wi-LAN, a patent development and enforcement entity with no products business. Wi-LAN nonetheless goes so far as to argue that its posture as a non-practicing patent plaintiff "warrant[s] broader protections" than in cases where the parties are direct competitors. Supra at 13. Yet, Wi-LAN is unable to explain how in-house counsel pose any greater risk of injury than outside counsel, who also participate in the defense and settlement activities, as well as patent licensing. Wi-LAN's hypothetical injury is unsupported by any precedent whatsoever, and cannot support Wi-LAN's request for heightened protection to its information that even head-to-head competitors of Defendants would be unable to attain. Infosint S.A., v. Lundbeck 2007 WL , *2 (S.D.N.Y.) ("More than broad allegations of harm unsubstantiated by specific examples or articulated reasoning, good cause requires the moving party [to] demonstrate that disclosure will work a clearly defined and very serious injury.") (internal quotations and citations omitted). Contrary to Wi-LAN's assertions, Wi-LAN's "Employee Bar" restriction will unnecessarily impede Defendants' in-house counsel from meaningfully participating in and managing this case. By its own admission, Wi-LAN seeks to restrict access to documents which would enhance the ability of defendants' in-house counsel to defend and settle this action. Supra at 5. However, these are precisely the documents that should be provided to in-house counsel, who, with their unique, specialized knowledge concerning the interworkings of their companies in relation to the pending litigation are best apt to evaluate the issues and fulfill their function as litigation managers. JOINT MOTION FOR ENTRY OF PROTECTIVE ORDER - PAGE 18 Dallas v1

19 Case 2:07-cv TJW Document 322 Filed 06/09/2009 Page 19 of 29 Wi-LAN attempts to justify its "Employee Bar" by arguing for reciprocity in view of the "Prosecution Bar" provision agreed to by the parties which precludes Wi-LAN's in-house counsel involved in patent prosecution from having access to Defendants' confidential documents concerning their products. However, as Wi-LAN recognized in agreeing that the "Prosecution Bar" should only apply to Wi-LAN and not Defendants, there is no reciprocal risk of injury to Wi-LAN, as Wi-LAN does not make or sell products. The fact that the "Prosecution Bar" only applies one-way in this case merely reflects Wi-LAN's status as a pure patent licensing company, and does not itself justify Wi-LAN's separate "Employee Bar" restriction. At bottom, Wi-LAN does not provide the required analysis for the broad "Employee Bar" restriction it seeks to impose. In fact, the parties negotiated the terms of this protective order for over a year without Wi-LAN even mentioning such a provision. During that period, Wi-LAN agreed that the prosecution bar provision should only apply to Wi-LAN, acknowledging that there are unique disclosure risks associated with Wi-LAN's status as a patent licensing company. Wi-LAN's late attempt to change the protective order without providing the necessary casespecific analysis should not be adopted. A. Wi-LAN's Per Se Ban On In-House Counsel Without Regard To The Specific Facts Concerning Each Party Is Improper In seeking to restrict the use and/or disclosure of information in this matter, Wi-LAN bears the burden of demonstrating that good cause exists for its proposed "Employee Bar" restriction. See, e.g., In Re Terra Int'l, Inc., 134 F.3d 302, 306 (5th Cir. 1998); MGP Ingredients v. Mars, Inc. 245 F.R.D. 497 (D. Kan. 2007) ("It is well settled that defendants have the burden of proving the competitive harm that would befall them by virtue of plaintiff's disclosure to inhouse personnel and outside consultants.") (citations omitted). The party seeking to restrict disclosure is required to make "a particular and specific demonstration of fact, as distinguished JOINT MOTION FOR ENTRY OF PROTECTIVE ORDER - PAGE 19 Dallas v1

20 Case 2:07-cv TJW Document 322 Filed 06/09/2009 Page 20 of 29 from stereotyped and conclusory statements." Gulf Oil Co. v. Bernard, 452 U.S. 89, 102 (1981) n.16; see also Turic v. Yamah Motor Corp., 121 F.R.D. 32, 35 (S.D.N.Y. 1988) (movant must demonstrate a "clearly defined and very serious injury"); United States v. Exxon Corp., 94 F.R.D. 250, 251 (D.D.C. 1981)("To establish cause under Rule 26(c) the courts have generally required a particular and specific demonstration of fact, as distinguished from stereotyped and conclusory statements."(quoting 8 Wright & Miller, Federal Practice and Procedure 2035 at 265 (1970))). The "particular and specific demonstration of fact" required must include a case-by-case factual analysis of the "circumstances surrounding each counsel's actual activity and relationship with the party represented, without regard to whether a particular counsel is in-house or retained." US Steel, 730 F.2d at (denial of in-house counsel access to another party's sensitive information "cannot rest on a general assumption that one group of lawyers are more likely or less likely inadvertently to breach their duty under a protective order."); see also Infosint, 2007 WL at *3 ("When conducing an inquiry, courts have adopted a case-bycase analysis, rather than a category-based exclusion policy."). 11 Here, Wi-LAN broadly concludes that each in-house counsel managing this litigation from twenty Defendants are "competitive decision makers" without offering specific analysis tailored to a particular person or position. Without qualification, Wi-LAN's proposed "Employee Bar" applies to "in-house attorneys or other employees of a Receiving party" across all Defendants, improperly denying access to all in-house counsel, even those whose job duties 11 In U.S. Steel, the Federal Circuit reversed a lower court's denial of access to confidential documents for inhouse counsel because the lower court had assumed that in-house counsel was more likely to inadvertently disclose confidential information. The Federal Circuit held that denial or grant of access, "cannot rest on a general assumption that one group of lawyers are more likely or less likely inadvertently to breach their duty under a protective order." Id. at Instead, courts "must" grant or deny access depending on the "circumstances surrounding each counsel's actual activity and relationship with the party represented, without regard to whether a particular counsel is in-house or retained." Id. at JOINT MOTION FOR ENTRY OF PROTECTIVE ORDER - PAGE 20 Dallas v1

21 Case 2:07-cv TJW Document 322 Filed 06/09/2009 Page 21 of 29 entail serving in a pure litigation advisory capacity. See R.R. Donnelly & Sons Company v. Quark, Inc., 2007 WL (D. Del.) at *1 ("A party's designation as 'in-house counsel' cannot serve to automatically deny that party access to information deemed confidential."). Such a categorical restriction violates U.S. Steel and sidesteps the required factual analysis of the particular roles of in-house counsel and their relationships to the parties. See, e.g., Brown Bag Software v. Symantec Corp., 960 F.2d 1465, 1471 (9th Cir. 1992) ("examining factually all the risks and safeguards surrounding inadvertent disclosure by any counsel, whether in-house or retained" and affirming the magistrate's investigation into "counsel's responsibilities as Brown Bag's sole legal advisor and personnel manager"); R.R. Donnelley & Sons Co. v. Quark, Inc., 2007 WL (D. Del. 2007) (inquiring into Chief Patent Counsel's role in "legal decision making" and whether such counsel would "report directly to any business person with direct responsibility for competitive decision-making."); see also Intel Corp v. VIA Technologies, Inc., 198 F.R.D. 525, (N.D. Cal. 2000); ST Sales Tech v. Daimler Chrysler Co., 2008 WL , at *3-*8 (E.D. Tex. 2008). B. Wi-LAN Fails To Establish Good Cause For Its Proposed "Employee Bar" Provision 1. Wi-LAN Has Not Established That Defendants' In-House Counsel Are Competitive Decision-Makers Wi-LAN admits that its Employee Bar would achieve "broader protections" than parties would otherwise have in "the typical litigation" involving head-to-head competitors, (supra at 19), but Wi-LAN fails to meet its burden to demonstrate that any of defendants' in-house counsel are in fact competitive decision-makers so as to merit such abnormal protection. See, e.g., US Steel, 730 F.2d at Wi-LAN merely argues that Defendants' in-house council "are in a competitive decision making position vis a vis Wi-LAN and its intellectual property" (supra at 8), and that somehow because Wi-LAN is a non-practicing entity, "Defendants' in-house lawyers JOINT MOTION FOR ENTRY OF PROTECTIVE ORDER - PAGE 21 Dallas v1

22 Case 2:07-cv TJW Document 322 Filed 06/09/2009 Page 22 of 29 are more directly a part of their companies' competitive decision making process" than in normal patent cases. Supra at 12. But Wi-LAN's conclusory assumption is not supported by any hard facts, but rather the proposition is that in-house counsel are "competitive" in the sense that they may be involved in managing and settling this case. Supra at If Wi-LAN's unsupported argument were accepted, virtually any party could argue that in-house (or outside counsel for that matter) should be barred access to its confidential information because it could be used in a settlement discussion. Nonetheless, courts commonly allow in-house access to sensitive business strategy information, despite the fact that such cases may of course at some point settle. See, e.g. Intervet, Inc. v. Merial Ltd., 241 F.R.D. 55, (D.D.C. 2007) ("there is simply no evidence before me that [the head of intellectual property for the competitor] is a competitive decision-maker"); Glaxo Inc. v. Genpharm Pharm., Inc., 796 F.Supp. 872, 876 (E.D. N.C. 1992) (it was improper to preclude in-house counsel from access to confidential information because he gave no advice to his client about competitive decisions such as pricing, scientific research, sales, or marketing); Volvo Penta of the Americas, Inc. v. Brunswick Corp., 187 F.R.D. 240, (E.D. Va. 1999) (it was in-house counsel's responsibility to supervise outside counsel in handling the litigation and she should be granted access to adversary's confidential information under protective order because she needed the access to effectively supervise outside counsel). In fact, one purpose of discovery is to encourage settlement. See, e.g., 3Com Corp. v. D-Link Systems, Inc., 2007 WL at *4, (N.D. Cal.) ("[D]iscovery of a defendant's financial situation may facilitate settlement of the action, which is one of the purposes behind the broad federal discovery rules."); Oakes v. Halvorsen Marine Ltd., 179 F.R.D. 281, 286 (C.D. Cal. 1998) (discovery "is valuable in assisting both sides in making a realistic appraisal of the case, and may lead to settlement and avoid protracted litigation"); Memry Corp. v. Kentucky Oil JOINT MOTION FOR ENTRY OF PROTECTIVE ORDER - PAGE 22 Dallas v1