Monday, September 18, 2017

PhishMe loses to Wombat in D. Del. on discovery issue

The court noted:

In assessing whether a proposed modification of a Protective Order would present an
unacceptable risk of inadvertent disclosure or competitive misuse of confidential information, it
would be error to deny access solely because of an in-house counsel's "general position"; instead,
"the factual circumstances surrounding each individual counsel's activities, association, and
relationship with a party ... must govern any concern for inadvertent or accidental disclosure."
US. Steel Corp. v. United States, 730 F.2d 1465, 1467-68 (Fed. Cir. 1984);see also Boehringer
Ingelheim Pharm., Inc. v. Hereon Labs. Corp., Civ.A.No. 89-484-CMW, 1990 WL 160666, at
*1 (D. Del. Oct. 12, 1990). This decision will tum, then, on a fact-intensive inquiry into whether
affected counsel (here, Mr. McGee) participates in "competitive decisionmaking" at PhishMe.
US. Steel Corp., 730 F.2d at 1467-68;In re Deutsche Bank, 605 F.3d at 1378. The Federal
Circuit has defined "competitive decisionmaking" as "counsel's activities, [*9] association, and
relationship with a client that are such as to involve counsel's advice and participation in any or
all of the client's decisions (pricing, product design, etc.) made in light of similar or
corresponding information about a competitor." US. Steel Corp., 730 F.2d at 1468 n.3; see also
In re Deutsche Bank, 605 F.3d at 1378-79.


courts have assessed the extent to which counsel--even if he or she does not
make competitive decisions-nevertheless directly advises other high level executives at the
company, who are themselves competitive decisionmakers in the subject matter areas relating to
the suit in question. See Intel Corp. v. VIA Techs., Inc., 198 F.R.D. 525, 530-31 (N.D. Cal. 2000)
(finding that concerns about the risk of harm from competitive decisionmaking were exacerbated
where a Senior Counsel for plaintiff regularly advised the general managers of the plaintiffs
business unit that were most affected by potential licensing agreements, and advised a Vice-
President involved in competitive decisionmaking who had been denied access to confidential
information by other courts in similar cases, and finding that it would be difficult for the Senior
7 See Blackbird Tech LLC, 2016 WL 2904592, at *4


Here, it is clear that while Mr. McGee may not be the "final decisionmaker" as to issues
regarding pricing, product design or those otherwise made in light of similar information about a
competitor (like Wombat), he plays a very important role in the process that leads to those
decisions. He provides legal advice to the final decisionmakers (including the company's CEO
and its Board) on these issues. (Tr. at 8-9) Moreover, Mr. McGee is not only the sole in-house
attorney who provides that kind of advice, but in most instances, he is really the only attorney
who ever does so (since outside counsel has not traditionally played any role in that process).
This all militates in favor of denial of the Motion. 9
A third factor, one particular to the patent context,

Press releases can come back to haunt people:

The Court also notes the apparent disconnect between the way PhishMe described
Mr. McGee's role in the November 2016 press release that was issued just after he was hired, and the way it has described Mr. McGee's role since this legal issue arose. In the press release, Mr. McGee is referred to as a "strategic business partner[,]" (D.I. 99, ex. 1 at 1), but now, PhishMe seems to shy away from that kind of description, (Tr. at 10). In the press release, PhishMe also describes Mr. McGee'.s prior work at Mandiant as including "negotiat[ion] and finali[zation]" of Mandiant's sale, (D.I. 99, ex. 1 at 1); but now, PhishMe states that this description is incorrect (or perhaps, at least a bit misleading), (D.I. 103, [*19] ex. 1 at~ 5 (Mr. McGee averring that "I did not negotiate the business terms in connection with the sale ofMandiant")). At a minimum, it seems like PhishMe wanted the reader of that press release to conclude that Mr. McGee had real experience with the kinds of issues and decisions that play an important role in setting a company's future "strategic" course.

Citation: 2017 U.S. Dist. LEXIS 150862


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