Federal Circuit IP
Modern Font Applications LLC v. Alaska Airlines, Inc., (Fed Cir (Utah) Dec. 29, 2022)
Modern Font Applications LLC v. Alaska Airlines, Inc., No. 2021-1838 (Fed Cir (Utah) Dec. 29, 2022). Opinion by Cunningham, joined by Reyna. Dissent by Newman.
Summary: Plaintiff, Modern Font Applications LLC (MFA) filed an interlocutory appeal challenging the District of Utah’s order, which affirmed a magistrate judge’s decision to exclude MFA’s in-house counsel from viewing Defendant, Alaska Airlines, Inc., source code designated AEO.
Background: Under the District of Utah’s standard protective order, Defendant Alaska designated certain source code as AEO which prevented Plaintiff MFA’s in-house counsel from viewing the source code. Plaintiff MFA tried to amend the protective order and the magistrate judge denied the motion and granted Defendant Alaska’s motions to maintain the designations, finding that source code contained trade secrets and deserved heightened protection; that the risk of inadvertent disclosure of Alaska’s confidential information outweighed the risk of prejudice to MFA; and that MFA’s in-house counsel was considered a competitive decision maker because of his licensing activity. The District of Utah affirmed. MFA appealed.
Issue: Whether the Federal Circuit had jurisdiction to hear the interlocutory appeal under the Collateral Order Doctrine.
- MFA’s appeal does not satisfy the third requirement of the Collateral Order Doctrine
- Courts of appeals may allow interlocutory appeals of decisions that (1) are conclusive; (2) resolve important questions separate from the merits; and (3) are effectively unreviewable on appeal from the final judgment in the underlying action
- MFA argued it would be irreparably prejudiced in its ability to effectively evaluate and prosecute its claims and such prejudice would be unlikely to serve as grounds for reversal of any adverse decision
- The majority disagreed that there would be any prejudice and that even assuming MFA would be unlikely to secure reversal on final appeal, that is insufficient to satisfy the third requirement
- MFA has access to outside counsel and could hire experts to support its technical analysis
- Financial hardship is not the kind of prejudice courts consider under the Collateral Order Doctrine (examples include whether a document should be sealed or unsealed because you can’t put the cat back in the bag when it comes to confidential information
- The issue is not a matter of jurisdiction, but rather discretion
- Jurisdiction is conferred by statute and used imprecisely
- Protective orders concerning confidentially and discovery have been reviewed applying the standard of abuse of discretion both at the Federal Circuit and other circuit courts
- The Collateral Order Doctrine is within the Courts jurisdiction and discretion
- The majority’s concern goes to discretion, not jurisdiction
- Should not wait for final judgment and should resolve the confidentiality and protective order issues now
Takeaway: Tee up discovery disputes as matters of discretion if you want them appealed and jurisdiction if you don’t.