Summary
This Memorandum and Order from the U.S. District Court for the Eastern District of New York resolves a discovery dispute regarding whether Plaintiff’s source code and trade secrets should receive an “attorneys’ eyes only” designation. Applying the good cause standard under Federal Rule of Civil Procedure 26(c)(1), the Court balanced the alleged risk of economic harm against the Defendants’ need to review the materials to effectively defend against copyright and breach of contract claims. Concluding that Plaintiff offered only conclusory assertions of harm and failed to account for the Defendant’s prior access to the software, the Court denied the Motion for a Protective Order.
Topics
Practice areas
Questions Presented
- Whether plaintiff established good cause under Federal Rule of Civil Procedure 26(c)(1) for an attorneys'-eyes-only protective order restricting defendant Samuel Kennedy from reviewing source code and alleged trade secrets.
- How the court should balance the producing party's risk of economic harm against the requesting party's need for access when considering an attorneys'-eyes-only designation in trade-secrets litigation.
Holdings
- Plaintiff failed to establish good cause for restricting access to its source code and alleged trade secrets to defense counsel and experts only because its assertions of harm were conclusory and lacked particularized factual support.
- Kennedy's presence in North Macedonia, standing alone, did not establish a sufficient risk to justify an attorneys'-eyes-only designation.
Key quotations
“As such, courts must carefully balance that risk of economic harm against the requesting party's need for the information.” (1)
“To enter a protective order with an 'attorneys' eyes only' provision, a court must balance the risk of economic harm to the producing party against the requesting party's need for the information.” (7)
“Plaintiff bears the burden to establish good cause for heightened FAAEEO treatment.” (8)
“The Court is likewise unpersuaded that Kennedy’s presence in Macedonia alone poses any risk to Plaintiff that cannot otherwise be cured through the use of the GitHub platform, which was already used to develop the software at issue in Macedonia.” (9)
Factual background
The dispute concerns PrepMod, computer software developed by plaintiff and defendant Samuel Kennedy during the early stages of the COVID-19 pandemic. Kennedy and Kennedy Technology MK allegedly developed the software in North Macedonia, registered the copyright in the source code, and retained at least a copy of the code as it existed when Kennedy ended his engagement with plaintiff. Plaintiff sought to restrict discovery access to its source code and alleged trade secrets because of claimed economic and competitive risks, while defendants argued that Kennedy needed access because he was the software's principal architect and alleged copyright holder. The parties had no confirmed written confidentiality or nondisclosure agreement during the software's development, although plaintiff asserted there may have been an oral confidentiality agreement.
Procedural history
Plaintiff initially commenced a declaratory judgment action in the United States District Court for the District of Maryland concerning software developed during the COVID-19 pandemic. The operative pleading asserted copyright, contract, defamation, tortious-interference, and trademark-related claims; several claims and one defendant were later dismissed pursuant to Rule 41(a)(1)(A)(ii). Defendants answered and asserted copyright-infringement and breach-of-contract counterclaims. During fact discovery in the Eastern District of New York, the parties reached an impasse over access to source code, leading to plaintiff's motion for a protective order. The court denied the motion.