Chewy, Inc. v. International Business Machines Corporation

Nature of the Order

This opinion is a stipulated protective order governing discovery during the pretrial phase of the litigation. The parties agreed to the confidentiality terms, and the court found good cause to enter an appropriately tailored order. It does not decide the parties’ underlying claims.

Protected Information

The order permits a producing party to designate previously undisclosed information as “Confidential” when it concerns specified categories, including ownership or control of a nonpublic company, business plans, product development or marketing information, customer information, or personal or intimate information. “Highly Confidential—Attorneys’ Eyes Only” information may include previously undisclosed financial information, trade secrets, confidential or proprietary source code, and other technical or business information whose disclosure could cause competitive, commercial, or financial harm.

People subject to the order may not disclose protected discovery material except as the order permits. Confidential material may be disclosed, when reasonably necessary for the case, to designated in-house counsel, outside counsel and their litigation staff, certain people identified in documents, approved experts and consultants, deposition stenographers, the court and its support personnel, and specified mediators or settlement participants. Highly confidential material may be disclosed only to the persons listed in the order’s more limited categories, generally excluding in-house counsel.

Before receiving confidential material, designated in-house counsel and experts or consultants must receive the order and sign a nondisclosure agreement. Experts and consultants must also undergo a notice-and-objection process. The producing party may object for good cause within seven days after receiving information about the proposed expert or consultant; unresolved objections may be presented to the court under the order’s deadlines.

Court Filings and Challenges

Confidential discovery material filed with the court, and filings that reveal it, must be filed under seal until further court order. The parties must use their best efforts to limit sealing and must publicly file redacted versions that redact only the confidential material itself. A party may object to a confidentiality designation before trial. If the parties cannot resolve the objection promptly, counsel must arrange a telephone conference with the court for a ruling.

The order warns that the court is unlikely to keep discovery material confidential if it is introduced at trial. The court also retains discretion over whether to protect confidential information submitted in connection with motions or other proceedings that may result in a court order or decision.

Source-Code Restrictions

If confidential source code is produced, access must generally occur on stand-alone computers that are not connected to a network, including the internet. The computers are to be located at the producing party’s outside counsel’s New York offices or another mutually agreed location, subject to procedures for access, review logs, security, and reasonable scheduling.

Reviewers may search and analyze the source code but may not bring outside electronic devices into the review room. They may take notes but may not copy source code into those notes. Access is limited to outside counsel, up to four approved outside consultants or experts, and certain administrative support personnel. Copies and printouts are restricted, must be secured, and must be marked as highly confidential source code. Electronic transmission over a network is prohibited, subject to the order’s limited provisions for court proceedings and depositions.

Privilege and End of the Case

An inadvertent disclosure of material protected by attorney-client privilege or attorney work-product protection does not waive those protections under the order. After receiving a claim of inadvertent disclosure, the receiving party must stop reviewing the material, return or destroy copies within five business days, and provide a certification. The producing party must then provide a privilege log, while retaining the burden of establishing the material’s protected status. The receiving party may ask the court to order production, and any such motion must be filed under seal.

The order survives the end of the litigation. Within 30 days after final disposition, protected discovery and copies must be returned to the producing party or destroyed if the producing party permits destruction.

Prosecution Bar and Enforcement

The order bars attorneys, in-house counsel, outside consultants, and experts who review the other party’s technical confidential discovery material from preparing or prosecuting patent applications concerning the patents-in-suit’s subject matter during the case and for two years after its conclusion, including appeals. It also restricts certain competitive decision-making activities during the case and for one year afterward. The order states that the prosecution bar is personal to the individual who reviewed the material and is not automatically attributed to others at that person’s law firm.

Judge Jed Rakoff ordered all people subject to the protective order to comply with it and stated that the court retains jurisdiction to enforce the order and impose contempt sanctions.