Last week, the U.S. Court of Appeals for the Federal Circuit issued an opinion in Static Media LLC v. Leader Accessories LLC, Case No. 2021-2303 (June 28, 2022), reversing a district court’s civil contempt decision.
Static sued Leader in 2018 for infringing a design patent owned by Static. The case was decided on the merits when the district court granted Leader’s motion for summary judgment of noninfringement—a decision not addressed in the instant opinion. During the infringement suit, Static and Leader entered into a protective order that required confidential information to “be used solely for the purpose of this action,” though it also allowed such information to be disclosed to certain outside independent persons who had signed a Written Assurance. After Static sued a third party, OJ Commerce, in a separate action (the “Florida Action”), OJ and Leader entered into a joint defense agreement and Leader provided certain confidential documents to OJ’s attorney, who had signed a Written Assurance. OJ’s attorney later used that confidential information in the Florida Action, in violation of the protective order’s terms. On a motion filed by Static, the district court found Leader and its attorney in civil contempt for disclosing the confidential documents to OJ’s attorney. Leader and its attorney appealed.
The Federal Circuit, reviewing the district court’s decision under an abuse of discretion standard, reversed. The Court first addressed whether Leader was responsible for OJ’s attorney’s improper use of the confidential information disclosed to him. The Court held that Static failed to prove by clear and convincing evidence that Leader knew or should have known OJ’s attorney would use the confidential information in the Florida Action. The Court noted that Leader had received OJ’s attorney’s signed Written Assurance before disclosure and repeatedly reminded OJ’s attorney about the protective order’s terms. The Court also noted Static’s concession during oral argument that it would be erroneous to hold Leader in contempt for OJ’s attorney’s disclosure. Next, the Court reviewed the district court’s finding that the disclosure of confidential information in connection with the development of a joint defense strategy was impermissible because it was a use not “solely” for purposes of the instant action. The Court held it was “unreasonable to view the protective order as clearly prohibiting the disclosure of confidential documents” to a signatory to the protective order for the purpose of developing a joint defense strategy.
Coauthored by Paige Stradley and Brian P. Monahon