Mynette Techs. v. United States

Robert J. Yorio, Carr & Ferrell LLP, Menlo Park, CA, with whom was Eric J. Maurer, Boies Schiller Flexner LLP, Washington, DC, for plaintiffs.

Michel E. Souaya, with whom were Gary L. Hausken, Director, Commercial Litigation Branch, and Brian M. Boynton, Principal Deputy Assistant Attorney General, Civil Division, U.S. Department of Justice, all of Washington, DC, for defendant.

Edward D. Johnson, Mayer Brown LLP, Palo Alto, CA, for third-party defendant Gemalto, Inc.

Richard L. Brophy, Armstrong Teasdale LLP, St. Louis, MO, for third-party defendant Idemia Identity & Security USA, LLC.

OPINION AND ORDER

RYAN T. HOLTE Judge

Mynette Technologies, Inc. and Steven M. Colby allege the government infringes their patents through technology produced by government contractors and defendant-intervenors Gemalto, Inc. and Idemia Identity and Security USA, LLC. Due to plaintiffs' failure to disclose their attorney's relationship with the company before negotiating a protective order, defendants filed a Motion for Sanctions, which the Court granted in part. The Court determined plaintiffs' actions did not create a risk of harm in this case, but they did create a risk of harm in future patent prosecution and litigation. Defendants had requested, in part, the parties propose a covenant not to sue. During oral argument, the Court discussed with the parties the technology scope of a potential covenant, should the Court require one. As the technology scope of disclosed confidential information had not been briefed, defendants asserted they could "put [their] heads together and be rational about coming up with a proposal [for the technology scope] or at least distill it down into a set of disputes" for the Court to address. The Court ultimately decided, as a remedy, a covenant not to sue would adequately address the risk of future harm to defendants. The Court directed the parties to meet-and-confer on the technical scope of confidential information produced in discovery and jointly propose a covenant not to sue. After filing nine motions for extensions of time, only Idemia reached a full agreement in principle with plaintiffs; the government and Gemalto did not. All defendants jointly filed a motion for reconsideration arguing the Court should have imposed terminating sanctions; the government and Gemalto specifically cited plaintiffs' conduct during negotiations as evidence the Court's sanction was inadequate. The Court ordered briefing on both the remaining covenant disputes and defendants' Motion for Reconsideration and subsequently held telephonic oral argument. During the argument, the parties agreed to language settling many of the parties' disputes. Based on these agreements and for the reasons presented below, the Court accordingly enters a modified protective order including the covenant not to sue and denies defendants' Motion for Reconsideration.

I. Procedural History

On 5 December 2022, the Court issued an opinion and order granting in part defendants' Motion for Terminating Sanctions, ECF No. 153. Mynette Techs., Inc. v. United States, 163 Fed.Cl. 733 (2022). The Court imposed sanctions due to plaintiffs' violation of the duty of candor for failing to disclose their attorney's status in Mynette Technologies, Inc. ("Mynette"). Id. at 760. As a remedy, the Court required the parties to negotiate a covenant not to sue (CNS) covering all plaintiffs' patents and adequately addressing the risk of future harm due to attorney-eyes-only (AEO) disclosures made during discovery. Id. at 771. Due to the technical and fact-intensive nature of the technology, the Court instructed the parties to meet-and-confer and reach an agreement on the appropriate technology scope for the CNS. Id. After numerous extensions of time, on 18 May 2023, the Court held a telephonic status conference to discuss why the parties had not reached agreement and directed the parties to file a joint status report outlining the parties' disagreements. 15 May 2023 Scheduling Order, ECF No. 169. The parties filed a joint status report on 17 May 2023. JSR, ECF No. 170. Shortly before the status conference started, defendants jointly filed a Motion for Reconsideration of the Court's 5 December 2022 Opinion and Order ("MFR"), ECF No. 171. The Court issued a scheduling order on 19 October 2023,

which adopted a briefing schedule for both the Motion for Reconsideration and the remaining CNS disputes. 19 Oct. 2023 Scheduling Order, ECF No. 172. On 2 June 2023, defendant-intervenor Idemia Identity and Security USA, LLC ("Idemia") filed its opening brief outlining an agreement in principle with plaintiffs. Idemia's Opening Br. Concerning Covenant Not to Sue ("Idemia's CNS Br."), ECF No. 175. The government and defendant-intervenor Gemalto, Inc. ("Gemalto") filed a joint opening brief the same day. Opening Br. of Defs. the U.S. and Gemalto Concerning Covenant Not to Sue ("Defs.' CNS Br."), ECF No. 176. On 20 June 2023, plaintiffs filed a response to the government's Motion for Reconsideration ("Pls.' MFR Resp."), ECF No. 179, and a response to defendants' opening CNS briefs ("Pls.' CNS Br."), ECF No. 180. Defendants filed a joint reply brief in support of their Motion for Reconsideration on 11 July 2023. Defs.' Reply in Supp. of Their Mot. for Recons ("Defs.' MFR Reply"), ECF No. 181.

II. Background

The factual background of plaintiffs' misconduct giving rise to sanctions can be found in full in the Court's previously issued Opinion and Order. Mynette Techs. v. United States, 163 Fed.Cl. 733, 740-44 (2022). In summary, the Court imposed sanctions due to plaintiffs' attorney, Mr. Yorio, failing to disclose his relationship with Mynette-including his [XXXX] ownership interest Mynette and his position on the board-while negotiating a protective order to cover, inter alia, attorneys-eyes-only documents. Id. at 769. This failure to disclose created a risk of future harm to defendants due jointly to his access to AEO documents and Mr. Colby, a Mynette shareholder's, continued patent prosecution:

[T]he only concern defendants identify with Yorio's access to confidential information is the use of AEO "information to guide Mynette's future lawsuits" and Colby's continued patent prosecution Defs.' Reply at 16 ("These patents can be used in future lawsuits against [d]efendants-a risk that is heightened because litigation is Mynette's only business activity."); see also Defs.' Suppl. Resp. at 26- 28. The Court finds a similar prosecution bar and CNS to those in Blackbird Tech, 2016 WL 2904592, would adequately remedy this risk of harm

Id. The Court's remedy required the parties to meet-and-confer on a CNS to be added to the protective order:

The Court instead requires the parties to meet-and-confer once more, Tr. at 202:6- 203:11, and jointly draft a modification to the protective order to add a covenant not to sue. The scope of the covenant shall exceed the Blackbird covenant to properly sanction plaintiffs' actions and deter future misconduct; it shall include all of Mynette's current and future patents (regardless of the date filed or acquired) related to the technology in discovery production at issue in this suit. At oral argument, counsel for Idemia requested the Court "keep in mind that we're not just dealing with the passport booklets themselves, but also the hardware for reading those booklets[,]" Tr. at 198:21-23, and counsel for Gemalto added Mynette has patents on RFID chips not limited to the passport context, and documents on RFID chips have been produced during discovery, Tr. at 200:1-9, 201:3-10. The Court agrees with this general summary of the technology[;]

however, as the scope of the discovery production technology in this case and its impact on the covenant not to sue have not been briefed, the Court will leave these issues to the parties to finalize during a future meet-and-confer, see Tr. at 202:6-203:11.

Id. at 771 (emphasis added).

At the June 2022 oral argument, Idemia stated, "I think we can probably put our heads together and be rational about coming up with a proposal or at least distill it down into a set of disputes that Your Honor could then address. . . ." 14 June 2022 Oral Arg. Tr. at 203:8-13, ECF No. 151. Between 21 December 2022 and 21 April 2023, however, the parties submitted nine joint motions for extension of time to file a stipulated amended protective order. See Order, ECF No. 166. If the parties anticipated filing another motion for extension of time, the Court required them to instead submit a joint motion for status conference. Id. at 2. The parties did not file a motion for a joint status conference; they instead filed a tenth motion for extension of time. Joint Mot. for Extension of Time, ECF No. 167; Unopposed Mot. of Extension of Time, ECF No. 168. The Court promptly scheduled a telephonic status conference to discuss why the parties had not reached agreement and directed the parties to file a joint status report noting the parties' positions on any disagreements. 15 May 2023 Scheduling Order. Shortly before the status conference, defendants filed a motion for reconsideration of the Court's Sanctions Order. MFR at 1.

At the 18 May 2023 status conference, defendants indicated the Motion for Reconsideration "was initiated perhaps largely by the government and Gemalto." 18 May 2023 Status Conf. Tr. at 15:8-9, ECF No. 174. Gemalto's role in driving these negotiations became further apparent when, following the status conference, Idemia's opening brief communicated it "ha[d] reached an agreement in principle" with plaintiffs. Idemia's CNS Br. at 3.^[1] While...