Confidential information often is produced during discovery for a lawsuit under a protective order. In a consolidated trade secret lawsuit, Crocs, Inc. v. Joybees, Inc., Nos. 21-cv-2859 & 23-cv-01719 (D. Colo. Jan. 25, 2024), the protective order (“PO”) in the earlier-filed lawsuit stated that a party may “use” protected material “in connection with this case only for prosecuting, defending, or attempting to settle this litigation.”

Joybees sought sanctions against Crocs for allegedly filing the second lawsuit based on information produced under the protective order from the earlier lawsuit rather than instead moving to amend the complaint in the earlier-filed lawsuit. Joybees alleged that Crocs allegedly used documents designated highly confidential and attorneys' eyes only under the protective order of the earlier-filed lawsuit.

The Court, however, found that “no protected information was disclosed” in the complaint for the second lawsuit. 

With respect to Joybees' argument that Crocs was “prohibited by the PO from even using knowledge of the HC-AEO documents or their contents when drafting a complaint—even if that complaint does not disclose confidential information”; the Court cited City of Fort Collins v. Open Int'l, LLC, No. 21-CV-02063-CNSMEH, 2022 WL 7582436, at *4 (D. Colo. Aug. 16, 2022) (collecting cases), which had defined the term “use” to be: reliance on or utilization of the confidential content within those documents. See also Milwaukee Elec. Tool Corp. v. Snap-on Inc., No. 14-CV-1296-JPS, 2016 WL 1719657, at *4 (E.D. Wis. Mar. 16, 2016).

In Open Int'l, LLC, the district court determined that the “plain meaning of the term use . . . requires something more than the mere use of one's knowledge that documents exist, and would instead require the substantive reliance on or utilization of the documents themselves to achieve a specific purpose.” Open Int'l, LLC, 2022 WL 7582436, at *5 (noting that knowledge of the existence of certain documents and ‘using' that knowledge to seek disclosure of those documents outside of the litigation did not constitute use of the documents or their contents).

Here, there was “no dispute” that Crocs had reviewed the confidential content of Joybees' documents produced under the protective order in the first lawsuit before drafting the complaint for the second lawsuit, but the Court held that there was no violation of the protective order because Crocs had not disclosed any confidential content in that complaint.

The Court also cited In re Dual-Deck Video Cassette Recorder Antitrust Litig., 10 F.3d 693, 694 (9th Cir. 1993) for the proposition that, for a protective order “to comply with common sense,” its prohibitions must be connected to its purpose, such as protection against disclosure of commercial secrets. In that decision, the Ninth Circuit “noted that the filing of the second lawsuit did not reveal any secrets or propriety information, which was the purpose of the protective order, and that Go-Video substantially complied with the reasonable interpretation of the protective order.” Id.; see also Static Media LLC v. Leader Accessories LLC, 38 F.4th 1042, 1048 (Fed. Cir. 2022) (“In other words, ‘use' here implies disclosure to the public or those not signatories to the protective order. The reasonableness of this interpretation is supported by decisions holding that the use of information gained by an attorney under a protective order in one case may appropriately be used by the same attorney to develop a strategy applicable to a second action.”).

The Court also cited Royal Park Invs. SA/NV v. Deutsche Bank Nat'l Tr. Co., 192 F. Supp. 3d 400, 403 (S.D.N.Y. 2016), noting that if a receiving party could not even refer to protected information produced in other litigation, then a producing party could “withhold relevant and discoverable documents in one action with impunity, even after producing them in a similar case (and even if there was nothing confidential about the documents themselves), safe in the knowledge that its adversary could not mention their existence without risking sanctions.”

Furthermore, the Court noted that because Crocs had moved to consolidate the cases, both will be controlled by the original protective order which will “put an end to litigation sideshows like the instant sanctions application, while continuing to protect genuinely confidential information,” quoting Royal Park, 192 F. Supp. 3d at 403.

Thomas P. Howard, LLC ligitates nationwide including in Colorado.