Upjohn Co. v. Hygieia Biological Laboratories

151 F.R.D. 355, 27 U.S.P.Q. 2d (BNA) 1601, 1993 U.S. Dist. LEXIS 18899, 1993 WL 387964
CourtDistrict Court, E.D. California
DecidedApril 28, 1993
DocketCiv. No. S-93-293 WBS/GGH
StatusPublished
Cited by8 cases

This text of 151 F.R.D. 355 (Upjohn Co. v. Hygieia Biological Laboratories) is published on Counsel Stack Legal Research, covering District Court, E.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Upjohn Co. v. Hygieia Biological Laboratories, 151 F.R.D. 355, 27 U.S.P.Q. 2d (BNA) 1601, 1993 U.S. Dist. LEXIS 18899, 1993 WL 387964 (E.D. Cal. 1993).

Opinion

ORDER

HOLLOWS, United States Magistrate Judge.

Previously pending on this court’s law and motion calendar for April 8, 1993, was defendant’s (Hygieia) motion to quash plaintiffs (Upjohn) subpoenas duces tecum served on third parties California Department of Food and Agriculture (CDFA) and the United States Department of Agriculture (USDA). The parties filed a stipulation pursuant to E.D.Cal.L.R. 251. Following oral argument on Hygieia’s motion, and pursuant to Hygi-eia’s request, the court ordered simultaneous briefing on the issue of whether Upjohn’s retained outside trial counsel should have access during discovery to materials containing alleged trade secrets. In their supplemental brief, Hygieia conceded the issue, but raised additional issues regarding the relevancy of the material requested by the subpoenas duces tecum, and requested appointment of a special master. By order filed April 19, 1993, the court requested additional briefing calling for Upjohn’s response to Hy-gieia’s relevancy arguments and request for a special master, and Hygieia’s comments regarding the logistics for appointment of a special master.

Having reviewed the parties’ stipulation, pleadings, supplemental briefing, and supporting documents, and heard oral argument, the court now issues the following order.

BACKGROUND

At the heart of this controversy are two veterinary vaccines. The first, known as the “J-5 TC (tissue culture)” vaccine, was developed by Poultry Health Laboratory, Inc. (PHL) during defendant Dale Wallis’ tenure there as staff veterinarian, a member of the Board of Directors, and owner of one-sixth of the stock. The vaccine prevents eoliform mastitis, a bacterial infection, in dairy cows. PHL subsequently entered into negotiations with Upjohn Company for purchase of the “J-5 TC” vaccine, and Wallis served during part of this time as principal negotiator for PHL. Full licensure of the vaccine was obtained by PHL from CDFA in December, 1991, and Upjohn entered into a Purchase Asset Agreement with PHL in January, 1992, to acquire exclusive rights to the vaccine.

Wallis left PHL in July, 1991, and in October, 1991, began working for defendant Hy-gieia Biological Laboratories, a newly formed corporation whose principal director is defendant’s husband, James Wallis. In July, 1992, defendants obtained full licensure from [357]*357CDFA for a “J-5 E. coli” vaccine, which prevents mastitis in cows, goats and swine.

Upjohn contends that the two vaccines are identical, and that Hygieia should be held to the noncompetitive/exclusive rights agreement Upjohn entered into with PHL. Hygi-eia contends that the vaccines are distinct, and that Upjohn, a larger company with greater resources, is unfairly seeking to establish a monopoly on the J-5 vaccine market. Neither vaccine has yet been licensed by the USDA. Hygieia and PHL/Upjohn are assertedly the only two competitors in the J-5 vaccine market.

Upjohn filed its complaint on February 24, 1993, alleging that Hygieia misappropriated and converted trade secrets rightfully belonging to Upjohn, and that Hygieia’s actions have delayed the licensure of the “J-5 TC” vaccine by the USDA.1 Hygieia filed a counterclaim on March 15, 1993, alleging, inter alia, unlawful restraint of trade.2

On March 11,1993, Upjohn served subpoenas duces tecum on CDFA and USDA, seeking production of requested documents on April 12, 1993, in Sacramento and Washington, D.C., respectively. As originally drafted, the subpoenas sought all documents and things relating to Hygieia’s application to license, register, or manufacture any veterinary vaccine, including any “E. coli antigen-based” vaccine. (Subsequently, in response to Hygieia’s relevancy arguments, Upjohn has agreed to limit the subpoenas to material “referring or relating to any J-5 Vaccine or any E. coli antigen-based vaccine for mastitis, rather than any ‘veterinary vaccine’ as presently called for.” Upjohn’s Supplemental Brief of Apr. 23, 1993, p. 3.)

Upon receiving a copy of the subpoenas, Hygieia’s counsel contacted Upjohn’s counsel and requested that the subpoenas be withdrawn. Counsel for Hygieia suggested that neutral parties within the state and federal agencies could confidentially evaluate the vaccines and provide the parties with their conclusions whether the vaccines are similar or dissimilar. Upjohn’s counsel rejected the proposal, and refused to withdraw the subpoenas, but offered to enter into a protective order to protect the confidentiality of the information obtained by the agencies, as well as any information provided by the parties pursuant to additional discovery. Hygieia declined to enter into negotiations for a protective order, and filed the instant motion to quash, also seeking Rule 11 sanctions. Third party subpoenants, CDFA and USDA, have not filed any objections to the subpoenas.

Upjohn filed its opposition brief, Hygieia its reply brief. The parties subsequently filed a Stipulation Regarding Discovery Disagreement pursuant to E.D.Cal.L.R. 251. In addition, the parties have each filed two supplemental briefs in response to the aforementioned requests by this court.

DISCUSSION

Upjohn’s subpoenas duces tecum were served pursuant to Fed.R.Civ.P. 45, which provides in pertinent part:3

(3)(A) On timely motion, the court by which a subpoena was issued shall quash or modify the subpoena if it ...
(in) requires disclosure of privileged or other protected matter and no exception or waiver applies ...
(3)(B) If a subpoena (i) requires disclosure of a trade secret or other confidential research, development, or commercial information ... the court may order ... production only upon specified conditions.

In addition, Fed.R.Civ.P. 26(c)(7) permits the court to issue a protective order which provides “that a trade secret or other confi[358]*358dential research, development, or commercial information not be disclosed or be disclosed only in a designated way.”

“As with most evidentiary and discovery privileges recognized by law, ‘there is no absolute privilege for trade secrets and similar confidential information.’ ‘The courts have not given trade secrets automatic and complete immunity against disclosure, but have in each case weighed their claim to privacy against the need for disclosure. Frequently, they have been afforded a limited protection.’” Federal Open Market Committee v. Merrill, 443 U.S. 340, 362, 99 S.Ct. 2800, 61 L.Ed.2d 587 (1979) (citations omitted); see also Hartley Pen Co. v. U.S. District Court, Etc., 287 F.2d 324, 330 (9th Cir.1961).

The qualified nature of the trade secret privilege is expressly set forth in Cal.Evid. Code § 1060: “...

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151 F.R.D. 355, 27 U.S.P.Q. 2d (BNA) 1601, 1993 U.S. Dist. LEXIS 18899, 1993 WL 387964, Counsel Stack Legal Research, https://law.counselstack.com/opinion/upjohn-co-v-hygieia-biological-laboratories-caed-1993.