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From Products Liability Law Daily, December 11, 2013

Protective order in knee implant case upheld, with modifications, against trade secret confidentially challenges

By Pamela C. Maloney, J.D.

A protective order issued during discovery in a pending multi-district litigation arising out of alleged defects in knee implants was sufficient to address the manufacturer’s trade secret confidentiality concerns and, therefore, the implant manufacturer’s motion for a supplemental confidentiality order was denied by a federal district court in Illinois. The court did, however, modify the existing order with regard to the procedure to be used in objecting to the confidentiality designation of documents produced (In re: Zimmer NexGen Knee Implant Products Liability LitigationDecember 10, 2013, Pallmeyer, R.).

Background. In this MDL, a number of patients alleged injury as a result of alleged defects in knee implants manufactured by the Zimmer Defendants (Zimmer). In this particular proceeding, Zimmer sought a supplemental confidentiality order with regard to the production of documents related to prior litigation and arbitrations between it and Dr. Scott, an orthopedic surgeon who claimed he was entitled to royalties for work as a consultant in the design of various Zimmer knee systems. The court had already entered a broad protective order and had directed the parties to negotiate any additional confidentiality provisions deemed necessary. However, negotiations stalled on two issues (1) proposed restrictions on certain witnesses' access to the documents; and (2) proposed restrictions on future employment by defendants' competitors for any of plaintiffs' experts who are granted access to the documents. In addition, Zimmer sought to bar current employees and consultants of its competitors from accessing the Scott materials. The court denied Zimmer’s request for a supplemental order but did modify the existing order with regard to the procedure by which the parties could object to the confidentiality designation of any document.

Protective order. Zimmer contended the Scott material contained proprietary trade secrets relating to its Persona product line which was in the process of being brought to market. According to Zimmer, the only solution to the risk that plaintiff’s experts might assist its competitors by sharing the information in any of the Persona design documents was to bar those experts from working for any of its competitors until the new product was on the market. Thus, Zimmer recommended (1) a two-tier designation for discovery materials, adding the designation of “Special Attorney Eyes Only (SAEO)” for Scott materials; (2) a requirement that plaintiffs seek advance approval from Zimmer before disseminating any SAEO information to any plaintiff’s expert who was a former Zimmer employee, a current consultant, or a former consultant; and (3) a bar against current employees and consultants of Zimmer’s competitors from access to SAEO materials.

Recognizing that multi-tier protective orders were relatively common in cases between direct competitors, the court noted that the protections sought by Zimmer appeared to be unprecedented. Zimmer cited no instances in which a court had imposed a mandatory non-compete agreement on opposing party’s experts and the court had been unable to find any such precedent in the Seventh Circuit or elsewhere. Furthermore, although a non-compete provision may have been appropriate in the Scott arbitration where Zimmer was opposed by a doctor who also designed knee replacements, the court found it less compelling in a case alleging products liability. Finally, Zimmer did not prove to the court that such a drastic measure was necessary to protect its competitive advantage with regard to products already on the market or that would be in the near future.

With regard to Zimmer’s demand that it provide advance approval before sharing Scott material with any expert who was or had been a Zimmer employee, the court found that the existing protective order already protected Zimmer’s interests through the threat of contempt. If the disclosure of these materials did create a genuine risk that the experts would violate the court’s protective order by disclosing Zimmer’s trade secrets, there was little evidence of the harm to Zimmer given the length of time it would take a competitor to bring products utilizing that knowledge to market. The risks to Zimmer also were diminished by the fact that the case was not one between competitors.

However, the court did acknowledge Zimmer’s proposed prohibition of disclosure of Scott materials and other SAEO information to its competitors’ employees and consultants who were working on products that compete with the products at issue in this suit. The court declined to rely exclusively on the existing protective order and drafted a supplementary order rather than a superseding order in which it established that the procedure by which the parties could object to the confidentiality designation of any document applied with equal force to any document designated as SAEO in the Scott proceedings.

Opinion testimony. The court also refused to strike a declaration made by Zimmer’s Director of Knee Development as hearsay. The plaintiffs had objected to the lack of any evidence to support the director’s contentions regarding the mental states of their experts. The court explained that as a long-time, high-ranking employee, the director had first-hand knowledge to substantiate his declaration.

The case number is 11 C 5468.

Attorneys: Tobias L Millrood (Pogust, Braslow, Millrood) for Zimmer Nexgen Knee Implant Products Liability Litigation. Karen Beyea-Schroeder (Fleming, Nolen & Jez L.L.P.) for Steven Genslinger, Debra K. Teague. Daniel Christopher Burke (Parker Waichman Alonso LLP) for Joseph Campbell. Ronald S. Goldser (Zimmerman Reed, P.l.l.p.) for Richard Cleveland. William B Allen (Fleming, Nolen & Jez, LLP) for Zimmer, Inc., Zimmer Holdings, Inc., Zimmer Orthopaedic Surgical Products, Inc., Zimmer Orthobiologics, Inc., Zimmer Surgical, Inc., Zimmer US, Inc., Orthopaedic Technologies, LLC, Zimmer Melia Associates, Inc., Wilson/Phillips Holdings, Inc., Zimmer Production, Inc. David Bagley Rheingold (Rheingold,Valet, Rheingold, Shkolnik & McCartney, LLP) for Mary Jane Lamanto.

Companies: Zimmer, Inc.; Zimmer Holdings, Inc.; Zimmer Orthopaedic Surgical Products, Inc.; Zimmer Orthobiologics, Inc.; Zimmer Surgical, Inc.; Zimmer US, Inc.; Orthopaedic Technologies, LLC; Zimmer Melia Associates, Inc.; Wilson/Phillips Holdings, Inc. Zimmer Production, Inc.

MainStory: TopStory EvidentiaryNews MedicalDevicesNews IllinoisNews

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