A Major Difference, Inc. v. Wellspring Products, LLC

243 F.R.D. 415, 68 Fed. R. Serv. 3d 311, 2006 U.S. Dist. LEXIS 36466, 2006 WL 4557906
CourtDistrict Court, D. Colorado
DecidedMay 26, 2006
DocketCivil Action No. 06-cv-00161-PSF-PAC
StatusPublished
Cited by4 cases

This text of 243 F.R.D. 415 (A Major Difference, Inc. v. Wellspring Products, LLC) is published on Counsel Stack Legal Research, covering District Court, D. Colorado primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
A Major Difference, Inc. v. Wellspring Products, LLC, 243 F.R.D. 415, 68 Fed. R. Serv. 3d 311, 2006 U.S. Dist. LEXIS 36466, 2006 WL 4557906 (D. Colo. 2006).

Opinion

ORDER

COAN, United States Magistrate Judge.

This is a trademark case. A February 1, 2006 Order of Reference referred this matter to the undersigned for pretrial case management. Now before the Court is plaintiffs Motion for Protective Order with Incorporated Certificate of Compliance with D.C.COLO.LCivR 7.1(a), filed May 5, 2006, Doc. #22. Defendant Wellspring1 has responded and plaintiff has replied. Oral argument would not be of material assistance.

I.

Both plaintiff and defendant Wellspring Products, LLC sell high-end footbath products. The parties agree that a protective order should be entered in this case but disagree about whether certain disclosed information should be restricted to “attorney’s eyes only.” Plaintiff seeks to expand the disclosure of materials under a protective order to a designated corporate representative. Wellspring contends that plaintiffs protective order is overbroad and Wellspring opposes disclosure of trade secret and proprietary or confidential financial business information to plaintiffs corporate representative. Wellspring consequently submits a narrower proposed protective order with an “attorney’s eyes only” provision.

II.

Rule 26(b)(1), Fed.R.Civ.P., allows broad discovery of “any matter, not privileged, which is relevant to the claim or defense of any party,” To resist discovery and upon a showing of good cause, Fed.R.Civ.P. 26(c) permits orders as justice may require “to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense; further” a court may enter a protective order providing that discovery “not be had” or “be had only on specified terms and conditions____” Fed.R.Civ.P. 26(c)(1) and (2); or a court may enter an order “that a trade secret or other confidential research, development, or commercial information not be revealed or be revealed only in a designated way.” Fed. R. Civ.P. 26(c)(7).

To carry the good cause burden under Rule 26(c)(7), a party must first estab[417]*417lish that the information is a trade secret or other confidential research, development, or commercial information and then demonstrate that its disclosure might be harmful. Centurion Indus., Inc. v. Warren Steurer & Assocs., 665 F.2d 323, 325-326 (10th Cir. 1981) (internal quotations and citations omitted). If those requirements are met, the burden then shifts to the party seeking discovery to establish that disclosure of a trade secret or other confidential information is relevant and necessary to the action. Id. Finally, the district court must balance the need for discovery of the trade secrets against the claim of injury resulting from disclosure. Id.

III.

There is no dispute that plaintiff and Wellspring are competitors in the business of selling “ion” footbaths. Plaintiff has claimed that Wellspring infringed on its registered trademark “loneleanse” by using the mark on Wellspring’s website and by using the mark or a combination of the words “ion” and “clean” or “cleanse” in its website metatags. The metatags are designed so that internet search engines direct the inquirer to websites which contain the words “ion” and “clean” or “cleanse.”

For an unknown period of time relevant to the complaint here, plaintiffs and defendant’s websites “popped up” when a searcher used the words “ion” and “cleanse” or “clean.” Plaintiff argues that some number of “hits” on the Wellspring website from such searches resulted in sales of Wellspring’s product. Plaintiff contends that, among other remedies, it should have its lost profits from Wellspring’s sales of footbaths and foot-bath products resulting from internet searches using the words “ion” and “clean” or “cleanse” or from the use of the same words or a combination of the same words or the mark itself on Wellspring’s website. Accordingly, sales, pricing and profits information, customer information, marketing strategies and mechanisms, other proprietary or confidential business information, and trade secrets are probably relevant to plaintiff’s claims and Wellspring’s defenses. The parties have recognized that competitive harm to Wellspring could result from the disclosure of such materials. Because the parties agree that such information should be under a protective order and that disclosure should be limited only to certain designated persons, I find that the Centurion test for the entry of a Rule 26(c)(7) protective order has been met.

The issue is whether the corporate representative of one company may review proprietary and confidential financial information of a direct competitor or whether the disclosure of confidential and proprietary information should be restricted to the attorneys for each party and to any outside experts or other outside persons who are necessary for the litigation of the action.

I find Centurion, supra, to be instructive. There, in a trade secrets case, the Tenth Circuit upheld the magistrate’s protective order, which released trade secret technical operating details to the attorney for the plaintiffs to be used only for purposes of litigation. The order stated

Cybernetic Systems, Inc. shall with (sic) twenty (20) days of the entry of this Order produce at its place of business in Albuquerque, New Mexico, to Charles H. Thomas, attorney for plaintiffs, all writings and materials relating to software or programming information of all its Mathi-puter Learning Systems and shall immediately thereafter give deposition testimony concerning the technical operating details of such Systems. The information obtained shall be treated as confidential by counsel for plaintiffs and used only for purposes of litigation in the United States District Court for the Central District of California, 76-2628-HP.

Centurion, 665 F.2d at 326, n. 7 (emphasis added).

The Court has reviewed plaintiffs and Wellspring’s proposed protective orders. Wellspring’s proposed order is more like the attorney’s eyes only order issued in Centurion, and adequately provides for two tiers of disclosure, depending upon the sensitivity of the information. Wellspring’s order protects Wellspring’s as well as plaintiffs trade secret, proprietary, and other confidential or sensitive business information from disclo[418]*418sure to any representative of a direct competitor. The defendant’s proposed order further includes a method for designation of materials and a method to challenge that designation. Finding Wellspring’s order acceptable, and plaintiffs overbroad, and potentially harmful to Wellspring because of plaintiffs intent to share the information with plaintiffs corporate representative, I will adopt Wellspring’s proposed order.

IV.

Accordingly, for the reasons stated, it is hereby

ORDERED that plaintiffs Motion for Protective Order with Incorporated Certificate of Compliance with D.C.COLO.LCivR 7.1(a), filed May 5, 2006, Doc. # 22, is denied. It is further

ORDERED that the attached Protective Order is made an Order of the Court this date.

PROTECTIVE ORDER

IT IS ORDERED:

1.

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243 F.R.D. 415, 68 Fed. R. Serv. 3d 311, 2006 U.S. Dist. LEXIS 36466, 2006 WL 4557906, Counsel Stack Legal Research, https://law.counselstack.com/opinion/a-major-difference-inc-v-wellspring-products-llc-cod-2006.