Heat & Control, Inc. v. Hester Industries, Inc.

785 F.2d 1017, 228 U.S.P.Q. (BNA) 926, 4 Fed. R. Serv. 3d 625, 1986 U.S. App. LEXIS 20020
CourtCourt of Appeals for the Federal Circuit
DecidedMarch 4, 1986
DocketAppeal 85-2553
StatusPublished
Cited by192 cases

This text of 785 F.2d 1017 (Heat & Control, Inc. v. Hester Industries, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Federal Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Heat & Control, Inc. v. Hester Industries, Inc., 785 F.2d 1017, 228 U.S.P.Q. (BNA) 926, 4 Fed. R. Serv. 3d 625, 1986 U.S. App. LEXIS 20020 (Fed. Cir. 1986).

Opinion

JACK R. MILLER, Senior Circuit Judge.

This is an appeal by Heat & Control, Inc. from a May 22, 1985, order of the United States District Court for the Northern District of West Virginia, 1 quashing a deposition subpoena issued by the same court on February 8, 1985. We vacate the order and remand the case to the district court for further proceedings.

BACKGROUND

Heat & Control’s patents relate to an apparatus (a convection oven termed a “counterflow oven” (“CFO”) by the parties) and method for cooking solid food products in circulating steam. 2

Hester Industries, Inc. (“Hester”) is a small corporation in Moorefield, West Virginia (within the jurisdiction of the Northern District of West Virginia), which commercially processes chickens. The processing includes cooking and freezing. Stein Associates, Inc. (“Stein”) manufactures and sells CFOs.

When Heat & Control’s oven and process inventions were being developed in 1972-73, an employee, Loew, was privy to information concerning the design, construction, and operation of Heat & Control’s oven. Loew’s employment was subsequently terminated, and he thereafter formed a company which manufactured ovens for commercial use. Hester contracted with Loew to manufacture, at its request, steam-circulating ovens. However, before they were manufactured, Loew’s business went bankrupt. Hester then contracted with Stein, who purchased the assets of Loew’s company (including the drawings and designs for the Hester oven), to construct the oven designed by Loew. In 1982, Stein manufactured two CFOs, which were delivered and installed at Hester’s plant. Both allegedly infringe Heat & Control’s patents.

Stein filed a declaratory judgment action against Heat & Control in the United States District Court at Toledo, Ohio. Heat & Control counterclaimed for infringement, and the action was later transferred to the United States District Court at San Francisco, where it is now pending. Stein seeks, inter alia, to have declared invalid Heat & Control’s patents. A preliminary skirmish in the form of an appeal taken by Stein from an interlocutory order of the California District Court, denying Stein’s motion for a preliminary injunction, is reported at 748 F.2d 653, 223 USPQ 1277 (Fed.Cir.1984).

Heat & Control sought discovery, in the United States District Court in West Virginia, from Hester concerning the operation of the CFOs it purchased from Stein. In February, 1985, Heat & Control was issued a subpoena by the district court for deposition of Hester’s officers and production of documents related to the allegedly infringing ovens.

Hester filed a motion to quash and both in its memorandum in support and at the hearing on the motion, argued that (1) the information sought constitutes proprietary trade secrets, the disclosure of which would seriously harm its business and (2) that the information sought was more conveniently available from other sources. Hester moved and argued in the alternative for a protective order under Fed.R.Civ.P. 26(e). Heat & Control opposed the motion to quash the subpoena, asserting that discovery was relevant and necessary to the main (infringement) suit pending in California, because Heat & Control needed to *1020 know the operating conditions in order to determine whether they fall within the Heat & Control patent claims and to assess damages if the ovens infringe. Counsel for Heat & Control also suggested to the court the issuance of a protective order.

The hearing on the motion to quash was held by a conference call on May 3, 1985. After the parties had argued, the court concluded the hearing by vacating the subpoena. The court stated that, on a matter ancillary to the main litigation in another forum, it should be hesitant to decide what constitutes relevant evidence under Fed.R. Civ.P. 26(b)(1). It analyzed Fed.R.Civ.P. 26(b)(1), as amended in 1983, and concluded that the rule requires that “use of discovery methods ... be limited by the court if it determines the discovery is obtainable from some other source that is more convenient and less expensive and less burdensome.” Although the court recognized the possibility of granting a protective order under which discovery could proceed, as an alternative to the grant of the motion to quash, it did not fully explore that possibility-

In its order to quash, the court stated that the information sought by discovery could be obtained from other sources more conveniently, less burdensomely, and less expensively; that the deposition posed a serious threat to the “processes” of Hester; and that Hester had shown good cause to have the subpoena vacated.

ANALYSIS

A. Jurisdiction and Appealability

The jurisdiction of the West Virginia district court is based on 28 U.S.C. § 1338. Subject matter jurisdiction in this court under 28 U.S.C. § 1295(a)(1) is not contested by the parties. However, generally an appellate court lacks jurisdiction to review an order granting a motion to quash a subpoena, because the order would be reviewable for error after final judgment on the merits.

Title 28 United States Code, section 1295 (with pertinent language identical to that found in 28 U.S.C. § 1291 covering appeals from the geographical circuits), provides that “[t]he United States Court of Appeals for the Federal Circuit shall have exclusive jurisdiction — (1) of an appeal from a final decision of a district court” in a case involving a patent (emphasis supplied). Panduit Corp. v. All States Plastic Co., 744 F.2d 1564, 1571, 223 USPQ 465, 468 (Fed.Cir.1984). Cf. Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 546-47, 69 S.Ct. 1221, 1225-26, 93 L.Ed. 1528 (1949) (addressing the “final” language in section 1291). This “final order rule” reflects “a strong congressional policy against piecemeal reviews and against obstructing or impeding an ongoing judicial proceeding by interlocutory appeals.” United States v. Nixon, 418 U.S. 683, 690, 94 S.Ct. 3090, 41 L.Ed.2d 1039 (1974) (citations omitted). However, it is well established that some orders, which do not terminate the underlying litigation, are appealable as a collateral order “exception” to the finality requirement, Richardson-Merrell, Inc. v. Roller, — U.S. -, 105 S.Ct. 2757, 2761, 86 L.Ed.2d 340 (1985); Coopers & Lybrand v. Livesay, 437 U.S. 463

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Bluebook (online)
785 F.2d 1017, 228 U.S.P.Q. (BNA) 926, 4 Fed. R. Serv. 3d 625, 1986 U.S. App. LEXIS 20020, Counsel Stack Legal Research, https://law.counselstack.com/opinion/heat-control-inc-v-hester-industries-inc-cafc-1986.