Silicon Genesis Corporation v. EV Group E.Thallner GmbH

Background

Silicon Genesis Corporation (SiGen) sued EV Group E.Thallner GmbH (EVG) for allegedly failing to pay royalties under a patent-licensing agreement. SiGen moved for monetary sanctions for civil contempt, arguing that EVG violated the Protective Order governing confidential information produced in the case.

The Protective Order allowed protected material to be used only to prosecute, defend, or try to settle this litigation. It also limited disclosure to specified people and required receiving parties, after the case ended, to return or destroy protected material and certify that they had kept no copies.

EVG filed a complaint against SiGen in the Commercial Court of Vienna. That complaint alleged that SiGen had improperly shared EVG’s confidential information with KPMG and Sensiba San Filippo, LLP. The Austrian complaint said EVG learned of the alleged disclosure during discovery in this U.S. case. SiGen had produced as confidential emails from its president and chief executive officer, Ted Fong, to KPMG and Sensiba, along with an attachment called the Gemini®FB Technology Description.

EVG later dismissed the Austrian case without prejudice. The court therefore vacated the hearing on SiGen’s request for a preliminary injunction to stop that lawsuit, but held a hearing on the contempt motion.

Contempt ruling

For civil contempt, SiGen had to prove by clear and convincing evidence that EVG violated a specific and definite court order. The court also explained that contempt would not be appropriate if EVG’s conduct resulted from a good-faith, reasonable interpretation of the Protective Order, and that substantial compliance could be a defense if EVG made every reasonable effort to comply.

The court held that the Protective Order’s plain language prohibited EVG from using SiGen’s confidential material outside this litigation, including to begin a foreign lawsuit. The court found that EVG’s Austrian complaint itself admitted that EVG learned about SiGen’s alleged disclosure through discovery in this case. The court concluded that EVG could not have learned about the disclosure of the Gemini®FB Technology Description to KPMG and Sensiba without SiGen’s confidential production of Ted Fong’s emails.

EVG argued that it complied because the Austrian complaint did not attach discovery materials marked “Confidential” or bearing document-identification numbers from this case. The court rejected that argument, explaining that the violation was EVG’s use of the confidential information to file the Austrian lawsuit, not merely the attachment of marked documents. The court also rejected EVG’s argument that it substantially complied with the Protective Order.

The court held EVG in contempt for violating the Protective Order and concluded that EVG had not acted in good faith. The court distinguished a prior decision involving a different protective order that was unusually broad and potentially unreasonable.

Remedies and disposition

The court ruled that monetary damages for contempt must be limited to SiGen’s actual losses caused by EVG’s noncompliance. SiGen sought attorneys’ fees and costs for defending the Austrian litigation and pursuing its request for emergency and preliminary-injunction relief in this court. The court granted SiGen’s motion for monetary contempt sanctions but deferred deciding the amount. SiGen could file supporting materials by November 1, 2023, EVG could respond by November 15, 2023, and the court would then consider the amount of fees and costs.

The court separately prohibited EVG from using the emails between Ted Fong and KPMG, the emails between Ted Fong and Sensiba, and their attachments to launch other litigation against SiGen or for any purpose outside this litigation. The prohibition includes documents labeled SIGEN 2504-2613 and SIGEN 3846-98 and continues after this case ends. EVG may not restart the Austrian lawsuit based on information learned from those emails unless the court first orders otherwise.

The court also designated those documents and all copies as “Attorneys’ Eyes Only.” EVG had to return them and all copies, in any form, to its counsel within 14 days. Dr. Werner Thallner had to file a declaration within 14 days confirming their return and confirming that EVG, its employees, and its agents possessed no copies. The order disposed of Docket No. 113.