Free Joint Status Report - District Court of Federal Claims - federal

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS IVAN G. RICE, Plaintiff, v. THE UNITED STATES, Defendant. ) ) ) ) ) ) ) ) )

No. 05-187C Senior Judge James F. Merow

JOINT STATUS REPORT FOR THE ORDER OF AUGUST 24, 2005 Counsel for plaintiff and defendant have conferred and submit this Joint Status Report pursuant to the Court's Order filed August 24, 2005 (the Order). As discussed below in detail, plaintiff's counsel negotiated through defendant's counsel with counsel for the Supplying Owners as to mutually satisfactory terms to be incorporated in the Protective Order. No agreement has been reached as to conditions for any access by the plaintiff, Ivan G. Rice, to any protected information of the Supplying Owners. In the current context, while further efforts to agree may be somewhat feasible, they are unlikely to be productive. I. Statement by Plaintiff, Rice.

The Court's Order dated August 24, 2005 instructed counsel for plaintiff and defendant to explore with Supplying Owners and plaintiff the possibility of reaching agreement(s) between plaintiff and Supplying Owners concerning terms that would permit access by plaintiff to their proprietary information, or portions thereof, and would cover the restriction(s) as to future activity by plaintiff that would be necessary to provide the requisite level of assurance that plaintiff is not, and will not become, a competitor. In accordance with that Order, Plaintiff's counsel mailed a letter dated August 25, 2005, -1-

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attached as Exhibit A, inviting the defendant and all the Supplying Owners to propose terms that "would provide the requisite level of assurance that plaintiff is not, and will not become, a competitor." On September 16, 2005, Plaintiff's counsel contacted Defendant's counsel by telephone, inquiring about the status of the proposal. Defendant's counsel indicated the Supplying Owners' concern with Plaintiff's patent infringement suit in Texas against two of the Supplying Owners (Rolls-Royce and Honeywell) relating to the same patent and the same engine design, i.e., the WR21. However, the infringing WR-21 engines that are the subject of the Texas case are being made for the French and British navies, not the United States Government. Also, unlike the present case against the Government, the infringing activities of Rolls-Royce and Honeywell are not protected by 28 U.S.C. Section 1498 in the Texas case. During the telephone call, Plaintiff's counsel asked whether the Supplying Owners intended to propose terms under which Mr. Rice would be permitted to review proprietary information under this Court's Protective Order. Defendant's counsel did not identify any proposal but asked if

Mr. Rice would be willing to agree to completely foreclose himself from any consulting work and agree to never file any patent applications or publish any technical papers. Plaintiff's counsel did not agree to a total foreclosure, but as a compromise, did state that Mr. Rice would agree to a procedure (later set forth in the September 28, 2005, letter, attached as Exhibit C) whereby Mr. Rice would first submit the identities of any prospective consulting clients, patent applications, or technical articles, for review and approval by the Supplying Owners, to insure that none of their confidential information was included. On September 23, 2005, Defendant's counsel mailed a letter to Plaintiff's counsel, stating -2-

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the Supplying Owner's proposed terms under which Mr. Rice would be permitted to review Proprietary Information. Those proposed terms are contained in the letter attached hereto as Exhibit B. On September 28, 2005, Plaintiff's counsel mailed a letter to Defendant's counsel, containing Mr. Rice's proposed procedure, which strikes a balance, by permitting the Defendant and Supplying Owners to review any proposed patent applications, technical articles, or consulting engagements, by Mr. Rice, to insure they do not contain or are based on any proprietary information of Supplying Owners, and to permit the Court to make the final decision in the event of a disagreement. Plaintiff requests that the Court incorporate the procedure set forth in Exhibit C as part of the Protective Order. II. Statement by Defendant, the United States of America.

On August 25, 2005, plaintiff's counsel sent the letter, attached as Exhibit A, to counsel for defendant and the Supplying Owners. In summary, this letter asked them to confer and send a joint written proposal for "terms that would permit access by plaintiff to [the Supplying Owners'] proprietary information, or portions thereof, and would cover the restriction(s) as to the future activity by plaintiff that would be necessary to provide the requisite level of assurance that plaintiff is not, and will not become, a competitor." Defendant's counsel emailed the Order and another copy of the Exhibit A letter to counsel for the Supplying Owners on August 30, 2005. On September 2, 2005, the plaintiff filed a suit in the Eastern District of Texas against two of the Supplying Owners (Honeywell International and Rolls Royce) for infringement of the same reexamined patent that is asserted in this action in the Court of Federal Claims. Defendant's counsel was unaware of the pendency of this action until September 7, 2005. -3-

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Defendant's counsel continued conferring with counsel for the Supplying Owners and telephoned plaintiff's counsel on September 16, 2005. At that time, defendant's counsel noted plaintiffs' status as an active litigant and inquired whether the plaintiff would agree to foreclose himself from future consulting work on gas turbines and from filing patent applications concerning gas turbines and from writing and publishing articles about gas turbines. Plaintiff's counsel rejected such a foreclosure and proposed to identify in advance those with whom the plaintiff would consult and, further, to submit any future patent applications and technical articles concerning gas turbines to the Supplying Owners for review for proprietary information prior to any filing or publication. Plaintiff's counsel indicated a desire for blanket permission for Mr. Rice to make the initial review of unidentified, Government maintained documents offered for inspection under the Protective Order and select those to be copied for production.1 He also indicated that the plaintiff would be hiring an independent expert for the Texas litigation. Defendant's counsel relayed to counsel for the Supplying Owners the substance of the September 16 telephonic discussion. After further conferring with and obtaining the approval of counsel for the Supplying Owners, defendant's counsel on September 23, 2005, emailed to plaintiff's counsel the letter attached as Exhibit B. In summary, this letter noted that the concerns of the Supplying Owners about Mr. Rice's competitive status had been heightened by plaintiff bringing the infringement action in Texas and explained why plaintiff's proposed pre-consultation/pre-filing/pre-publication approval process for Mr. Rice's future consultations, patent applications, and technical articles was unsatisfactory. This letter clearly stated that Mr. Rice "should continue to be precluded in

Pursuant to Paragraph 4 of the Protective Order, such initial review by Mr. Rice would occur prior to any notification to any Supplying Owner or any marking or legending by any Supplying Owner. -4-

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accordance with the Protective Order . . . from access to any proprietary information." On the other hand, the Exhibit B letter did indicate the willingness of the Supplying Owners "to determine on a document-by-document basis, whether and under what terms, Mr. Rice may be accorded access to specifically identified documents containing `Protected Information.'" The Exhibit B letter further explained that proprietary documents have varying degrees of sensitivities that preclude projection or formulation of adequate terms needed to protect proprietary content ranging from sensitive to highly sensitive. Accordingly, the letter indicated that the Supplying Owners need to know the specific identities of the documents that plaintiff's counsel or his independent expert wants Mr. Rice to review in order to be able to propose adequate terms and conditions for access. Above, plaintiff's counsel inaccurately describes the September 23, 2005 letter (Exhibit B) as "proposed terms under which Mr. Rice would be permitted to review Proprietary Information." Indeed, the thrust of the Exhibit B letter was that no terms could be proposed until the documents to be shown to Mr. Rice were identified. The letter envisioned that the specific documents sought were to be selected from those that had been previously produced in response to a subpoena or under the Protective Order entered August 24, 2005, and that a justification for access by Mr. Rice would be needed. Then, on September 28, 2005, plaintiff's counsel sent by facsimile to defendant's counsel the letter attached as Exhibit C. By way of summary, plaintiff's counsel set forth the details of his proposed pre-consultation/pre-filing/pre-publication process that had already been rejected by the Exhibit B letter. The Exhibit C letter does not state whether the plaintiff will agree to the Supplying Owners' proposed document-by-document process wherein plaintiff's counsel or its independent expert is to -5-

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specifically identify the documents that they want Mr. Rice to review. Plaintiff's statement herein does not indicate whether plaintiff will agree to the terms proposed by defendant and the Supplying Owners. Defendant and the Supplying Owners oppose plaintiff's request that the court incorporate the procedure set forth in Exhibit C as part of the Protective Order. They contend that Plaintiff's proposed modification of the Protective Order to include the pre-consultation/pre-filing/pre-approval process that is expressly reviewable by the Court even after termination of this action is unacceptable. In their view, it does not provide "the requisite level of assurance that plaintiff is not, and will not become, a competitor" as contemplated by the Order. Giving Mr. Rice access to a large volume of possibly unlabeled but sensitive proprietary documents could stimulate his thinking in unforeseeable ways. This highlights the need to prevent Mr. Rice from having access to the Supplying Owners' proprietary information, since it is apparent that there is a significant risk that Mr. Rice, inadvertently or otherwise, could misappropriate and/or misuse that information. There is simply no adequate justification for exposing the Supplying Owners to this unnecessary and unfair risk. This access also could lead to premature introduction of the proprietary content into the public domain, or worse, lead to giving Mr. Rice an unwarranted opportunity to file for patent protection that could block or inhibit the Supplying Owners from exploiting their own technology.

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PETER D. KEISLER Assistant Attorney General JOHN FARGO Director September 30, 2005 S/ B. Frederick Buchan, Jr. B. FREDERICK BUCHAN, JR. Attorney Commercial Litigation Branch Civil Division Department of Justice Washington, D.C. 20530 Phone: (202) 307-0335 Facsimile: (202) 307-0345 Attorneys for Defendant

OF COUNSEL: KEN B. BARRETT Attorney Department of Justice

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EXHIBIT A Letter dated August 25, 2005, from Douglas H. Elliot to B. Frederick Buchan, Jr., et al.

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EXHIBIT B Letter dated September 23, 2005, to Douglas H. Elliot from B. Frederick Buchan, Jr.

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U.S. Department Justice of

BFB:typ 154-05-187

Telephone: (202) 307-0335 Facsimile: (202) 307-0345
Washington, D.C. 20530

September 23, 2005 VIA E-MAIL, FACSIMILE & CONFIRMATORY COPY BY FIRST CLASS MAIL

DouglasH. Elliott, Esquire Moser, Patterson & Sheridan, LLP 3040 Post OakBoulevard, Suite 1500 Houston, Texas 77056 Re: Ivan G. Rice v. UnitedStates, Court of Federal Claims No. 05-187 C Dear Doug: This letter pertains to the Court's Orderfiled August24, 2005, and your letter to medated August25, 2005, requesting a joint written proposal concerning"temasthat wouldpermit access by plaintiffto [tbe supplyingowners']proprietary information,or portions thereof, and wouldcover the restriction(s) as to the future activity by plaintiff that wouldbe necessaryto providethe requisite level of assurance that plaintiff is not, and will not become,a competitor." Youand I discussed somefacets of the temas by telephone on September16, 2005. I have further consulted with connsel for the principal supplying ownersand amreporting their consensusto you] Oneof the possible future activities of Mr. Rice about whichthe supplying ownershad been concerned during the briefing as to entry of the Protective Order has occurred. Soon a~er the Court'sruling, yourclient, Ivan G. Rice, filed suit in the Tyler Divisionof the Eastern District of Texasagainst Honeywell International Inc. and Rolls-RoycePLC infringementof the for same patent in this action. Your client's status as a very active litigant in plural cases gives rise to a greater potential for his misuseof proprietary information,evenif inadvertently, particularly since "Protected Infom~ation" disclosed in this case is only to be used for purposesof this case. Frankly, the filing of the action in Texas has heightened the supplying owners' concerns regarding the motivationsof Mr. Rice in seeking to obtain access to their proprietary infomaation. Moreover,we understandfrom our telephone conversation that Mr. Rice will not absolutely forego the future preparation and filing of additional patent applications on gas turbines or writing

~ Counselfor the following were consulted: Honeywell International [the successor in interest to AlliedSignal], L-3 MAPPS successor in interest to CAE [the Electronics Ltd], Northrop Grumman Corp. [the successor in interest to Westinghouse Corp.], and Rolls-RoyceIndustrial & MarineGas Turbines, Ltd.

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and publishing of technical articles about them. The proprietary information belongingto as many as four of the supplyingownersis quite voluminous can be widelyvaried in scope. Accordingly, and reviewby the supplyingownersof final drafts of the applications or articles just before filing or publishing them does not provide adequate protection. Thus, Mr. Rice should continue to be precluded in accordancewith the Protective Order entered in this case on August24, 2005, fi'om access to any proprietary documents. Since proprietary documentscan have varying degees of sensitivity, it is impossible to project in advancethe terms neededto adequatelyprotect the informationfrom improperdisclosure and use. There is no pendingdiscoveryrequest in this case directed to any of the supplyingowners and no selection of Goverument-maintained documentsfor which any supplying ownermust receive written notice under Paragraph of the Protective Order. Thus, in the supplyingowners'view, there 4 is no documentor category of documentswhich have been identified to them with reasonable particularity for whichaccess by Mr. Rice is being requested. Resolutionof the issue of Mr.Rice's access must start with an identification of the documents whichMr. Rice is requesting access. for Requests for the supplying ownersto give blanket authorizations to large numbersof documents potentially containingproprietary information,i.e., "Protected Infomaation" under the Order, are not sensible. The supplying owners are willing to determine on a document-by-document basis, whether and under what terms, Mr. Rice maybe accorded access to specifically identified documents containing "Protected Information." Such documents must have been previously produced to plaintiff's counsel in response to a subpoena of a non-party or under the Protective Order in compliancewith the Court's rules. Also, plaintiff's counsel should send the request for the terms determinationto defendant's counsel along with an adequatejustification as to Mr. Rice's needto reviewthe particular document order to prosecute this case. Presumably, in plaintiff's counsel and plaintiff's acceptable, independent expert for this case will have previously reviewedand selected the particular documents that they wishto disclose to Mr. Rice. Please send meby Wednesday afternoon, September28, 2005, a draft of your position to include in the Status Reportdue September 2005. I will attempt to draft a Joint Response. 30, Please feel free to call meat the abovetelephone number should you have any questions.

Attorney CommercialLitigation Branch Civil Division

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EXHIBIT C Letter dated September 28, 2005, from Douglas H. Elliot to B. Frederick Buchan, Jr.

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