Joe R. Brown et al., Plaintiffs-appellees, v. Britt O. Braddick et al., Defendants-appellants.joe R. Brown et al., Plaintiffs-appellees, v. Britt O. Braddick et al., Defendants-appellants, 595 F.2d 961 (5th Cir. 1979)

We deal here with motions for stays of two district court discovery proceedings, both related to a single patent interference case pending in the Patent Office. Braddick and Lindsey together are the senior party in the patent interference proceeding before the U.S. Patent and Trademark Office Board of Interferences; Brown, with Cochran and Montgomery, is the junior party in this proceeding. Brown allegedly is attempting to use 35 U.S.C. § 24 to discover evidence in possession of the senior party, through the use of compulsory process of U.S. district courts and without complying with Patent Office procedural rules.¹  We deal with the two proceedings separately.

No. 79-1026.

Junior party Brown, acting pursuant to Patent Office rule 287, 37 C.F.R. § 1.287, requested the Board of Interferences (BI) to order senior party Braddick to answer interrogatories and produce documents. BI denied this discovery request because it was made during presentation of the junior party's testimony in chief and Brown had made no showing that the requested discovery would be in the "interest of justice," as required by 37 C.F.R. § 1.287(c); See generally note 1 Supra.

After losing before BI,²  Brown, relying on 35 U.S.C. § 24,³  obtained from the clerk of the district court for the Southern District of Texas, where Braddick resides, a subpoena requiring Braddick to appear for deposition and to bring documents in his possession.⁴  On November 30, 1978, the district court denied Braddick's motion to quash this subpoena. A hearing on a motion to reconsider was held December 1, but before the district court ruled on this motion Braddick filed notice of appeal on December 13. The next day the district court entered an order denying the motion for reconsideration and set the date of Braddick's deposition for December 18. Braddick failed to appear for this deposition. Afterwards, on December 21, he filed an "amended" notice of appeal from the district court's denial of reconsideration. On January 8, 1979, the district court found Braddick in contempt for failure to comply with its subpoena and set the date for hearing to determine "punishment" for January 11. On January 10 appellant Braddick requested a stay of further attempts to obtain discovery and of further contempt proceedings against him.⁵  On January 10 this court stayed further district court proceedings "pending further consideration by the panel."

A threshold issue is whether the district court order requiring the deposition is final and appealable. Gladrow v. Weisz, 354 F.2d 464, 466 (CA5, 1965), holds such orders appealable because the discovery order is all that is before the district court and the case is completely ended as far as the district court is concerned when it grants or denies discovery. Accord Sheehan v. Doyle, 513 F.2d 895, 898 (CA1), Cert. denied, 423 U.S. 874, 96 S. Ct. 144, 46 L. Ed. 2d 106 (1975); Frilette v. Kimberlin, 508 F.2d 205, 209-10 (CA3, 1974), Cert. denied, 421 U.S. 980, 95 S. Ct. 1983, 44 L. Ed. 2d 472 (1975); Hogan v. Natta, 392 F.2d 686, 689 (CA10, 1968); Ochsner v. Millis,382 F.2d 618 (CA6, 1967); Natta v. Zletz, 379 F.2d 615 (CA7, 1967). The Second Circuit, however, has held that district court decisions on patent discovery orders are not appealable (unless the district court denies discovery of a non-party). See Shattuck v. Hoegl, 523 F.2d 509 (CA2, 1975), After further proceedings, 555 F.2d 1118 (CA2, 1977). The Second Circuit reasoned that even though the case before the district court was completed, the discovery order nevertheless lacked finality because an aggrieved party could have the evidence excluded before BI or raise the issue when the completed case was appealed to a district court or the Court of Customs and Patent Appeals under 35 U.S.C. § 141.

The Fifth Circuit position appears sound to us. Shattuck seems to us not consistent with Cobbledick v. U. S., 309 U.S. 323, 329-30, 60 S. Ct. 540, 543, 84 L. Ed. 783, 787-88 (1940), in which the Supreme Court said that a district court order directing a witness to testify before the ICC is final and appealable because "there remains nothing for it (the district court) to do." The Supreme Court reasoned, "The proceeding before the district court is not ancillary to any judicial proceeding. So far as the court is concerned, it is complete in itself." This reasoning is applicable here. Once the district court has granted or denied discovery, it is finished with the case. That further action in another forum is possible is irrelevant. The district court order granting Brown's discovery request should be treated as final and appealable. See Note, Discovery in Patent Interference Proceedings, 89 Harv. L. Rev. 573, 589-92 (1976).

A second threshold question is whether Braddick's notice of appeal deprived the district court of any further power to take action to enforce its order. Since Braddick failed to ask the district court for a stay pending appeal and to post supersedeas bond as required by F.R.C.P. 62(d), the district court retained power to enforce its order by civil contempt proceedings. See Sekaquaptewa v. MacDonald, 544 F.2d 396, 406 (CA9, 1976), Cert. denied, 430 U.S. 931, 97 S. Ct. 1550, 51 L. Ed. 2d 774 (1977); Blackwelder v. Crooks, 151 F. Supp. 26 (D.D.C. 1957), Rev'd on other grounds, 102 U.S.App.D.C. 290, 252 F.2d 854 (1958). Although U. S. v. Roundtree, 420 F.2d 845, 853 (CA5, 1969), seems to say broadly that contempt may not be imposed as a sanction for violating a court order after an appeal has been filed unless the party's failure to obtain a stay pending appeal was wilful, on close reading it appears that there the court was discussing criminal contempt. Roundtree should not be extended to civil contempt because "(t)he crucial issue in civil contempt proceedings, as distinguished from criminal contempt, is not . . . state of mind but simply whether the Court's order was in fact violated." NLRB v. Crown Laundry & Dry Cleaners, Inc., 437 F.2d 290, 293 (CA5, 1971).

There are four prerequisites to obtaining a stay pending appeal:

It is, of course, well settled that in order to obtain a stay pending appeal the applicants must demonstrate (1) a substantial likelihood that they will prevail on the merits; (2) that they will suffer irreparable harm if the stay is denied; (3) that issuance of a stay will not substantially harm other parties to the proceeding; and (4) that issuance of the stay will not interfere with the public interest.

Taylor Diving & Salvage v. U. S. Dept. of Labor, 537 F.2d 819, 821 n.8 (CA5, 1976). We do not foresee any interference with the public interest if the stay is denied, and Brown has pointed to none. If a stay is denied, Braddick will be irreparably harmed because he will be forced to choose between complying with the discovery order (and thus forfeiting the procedural advantages the senior party enjoys under Patent Office rules) and continuing his refusal to comply with exposure to possible sanctions for contempt. Although "harm" in some sense may be caused to Brown by issuance of a stay in that he will not be able under Patent Office rules to discover the senior party's evidence in time to present it during his own testimony-in-chief before BI, this "harm," even if legally cognizable, will not be substantial since he will have another opportunity to present evidence during rebuttal. Thus the critical issue is whether Braddick has shown substantial likelihood that he will prevail on the merits. We believe such a showing has been made. Since it appears clear that the district court's finding of contempt on the part of Braddick was a finding of civil, rather than criminal, contempt,⁶  the district court contempt order will be invalid if the underlying subpoena was wrongly issued. ITT Community Dev. Corp. v. Barton, 569 F.2d 1351, 1357 (CA5, 1978).⁷ 

The prevailing interpretation of 35 U.S.C. § 24 has been that it authorizes district courts to grant discovery beyond that permitted by BI discovery rules and rules of admissibility.⁸  See, e. g., In re Natta,388 F.2d 215 (CA3, 1968); Babcock & Wilcox Co. v. Combustion Eng'r, Inc.,430 F.2d 1177 (CA2, 1968), Aff'g mem. 314 F. Supp. 235 (D. Conn.) ; Natta v. Hogan, 392 F.2d 686 (CA10, 1968); Natta v. Zletz, 379 F.2d 615 (CA7, 1967). Recently, however, the First and Third Circuits have rejected this interpretation of § 24 and have held that § 24 authorizes district courts to enforce subpoenas only for materials that are discoverable under Patent Office discovery rules. See Frilette v. Kimberlin, 508 F.2d 205 (CA3, 1974) (en banc), Cert. denied, 421 U.S. 980, 95 S. Ct. 1983, 44 L. Ed. 2d 472 (1975) (overruling In re Natta, supra) ; Sheehan v. Doyle, 513 F.2d 895 (CA1); Cert. denied, 423 U.S. 874, 96 S. Ct. 144, 46 L. Ed. 2d 106 (1975), After further proceedings, 529 F.2d 38 (CA1), Cert. denied, 429 U.S. 870, 97 S. Ct. 182, 50 L. Ed. 2d 150 (1976). There is no controlling Fifth Circuit precedent.⁹  We find the Frilette reasoning persuasive.

In Frilette, the Third Circuit argued that if the Congress that enacted 35 U.S.C. § 24 had intended to change previous practice in favor of the unique system of allowing district courts to control pre-trial discovery before an administrative agency, it would have used more explicit language to obtain this result or at least there would be some indication in the legislative history that this was the congressional intent. 508 F.2d at 211-12. In reaching this conclusion the court stressed the disrupting effects of allowing district court interference in Patent Office proceedings. The reason given by courts that have allowed district courts to grant discovery where BI rules do not allow it is that the "clear language" of the statute (quoted in note 3 Supra) allows no other result. See, e. g., Natta v. Zletz, 379 F.2d 615, 618 (CA7, 1967); In re Natta, 388 F.2d 215, 217 (CA3, 1968). But, as the Frilette court suggests, the language is not so clear as to compel the conclusion that Congress meant to allow discovery in district courts independent of BI control. See 508 F.2d at 211; Accord Sheehan II, 529 F.2d at 40; See generally Note, Discovery in Patent Interference Proceedings, 89 Harv. L. Rev. 573, 573-89 (1976). Because BI discovery rules do not appear to permit discovery of this material at this time, as shown by BI's disapproval of Brown's discovery request, if Frilette and Sheehan are followed, Braddick will prevail on the merits.

In sum, Braddick has met all requirements for issuance of a stay pending appeal. Therefore, the temporary stay granted at his request will be continued in effect. Because Braddick's attorney Hayden has not shown that he is in danger of being held in contempt, no stay of district court proceedings against him is necessary.

No. 79-1407.

The facts are skimpy. Brown has filed in the Western District of Texas subpoenas for Lindsey, a member of the senior party, and for Wayne Grainger, a nonparty. The district court refused to quash either subpoena but neither of the two persons named appeared for deposition at the specified time. The district court then set a second date, February 2, 1979, for compliance with its subpoena. Braddick and Lindsey, the senior party, sent a telegram to this court requesting that further district court proceedings in the Western District of Texas be stayed pending appeal. We ordered district court proceedings "stayed pending action by a panel of this court on appellant's motion for stay pending appeal."

The moving party has not carried its burden. First, one of the persons subpoenaed, Grainger, is not a party to the interference proceeding and has not joined in the request for a stay. Braddick and Lindsey do not have standing to raise the issue of Grainger's amenability to the compulsory process of the district court since they are not in possession of the materials subpoenaed and have not alleged any personal right or privilege with respect to the materials subpoenaed. See Vogue Instrument Corp. v. LEM Instruments Corp.,41 F.R.D. 346, 348 (S.D.N.Y. 1967); Shepherd v. Castle, 20 F.R.D. 184, 188 (W.D. Mo. 1957); 9 C. Wright & A. Miller, Federal Practice and Procedure, § 2457 at 431 (1971).

Second, reading Lindsey's brief generously, he appears to be arguing that because Brown did not "clearly enunciate" the testimony he wanted from Lindsey, discovery would not be permitted under Patent Office discovery rules,37 C.F.R. § 1.287, and that therefore under the Frilette-Sheehan construction of 35 U.S.C. § 24 the district court should not have allowed discovery.37 C.F.R. § 1.287 does not on its face contain a "clear enunciation" requirement. Even if there is such a requirement, Lindsey does not attach the subpoena and, as a result, we cannot tell whether the subpoena is adequate. Lindsey fails in his burden of showing a substantial probability of success on the merits.

If his brief is read very generously, Lindsey may also be arguing that district court-compelled discovery under 35 U.S.C. § 24 is improper unless the Patent Office has affirmatively authorized such discovery. This argument also is insufficient to show a substantial probability of success on the merits. Although the First Circuit appears to require affirmative authorization before a district court subpoena may be issued under 35 U.S.C. § 24, See Sheehan v. Doyle, 513 F.2d 895 (CA1), Cert. denied, 423 U.S. 874, 96 S. Ct. 144, 46 L. Ed. 2d 106 (1975), After further proceedings, 529 F.2d 38 (CA1), Cert. denied, 429 U.S. 870, 97 S. Ct. 182, 50 L. Ed. 2d 150 (1976); Note, Discovery in Patent Interference Proceedings, 89 Harv. L. Rev. 573, 577 (1976), the Third Circuit in Frilette v. Kimberlin, 508 F.2d 205 (CA3, 1974) (en banc), Cert. denied, 421 U.S. 980, 95 S. Ct. 1983, 44 L. Ed. 2d 472 (1975), did not impose such a requirement and instead held only that § 24 may not be used to obtain materials not discoverable under BI discovery rules. There was no requirement of affirmative BI authorization before the 1952 enactment of § 24, See generally In re Natta, 388 F.2d 215, 221-23 (CA3, 1967) (Seitz, J., dissenting), and neither the language nor the legislative history of § 24 reveals any congressional intent to make discovery in the district courts more difficult than it previously had been. Moreover, none of the BI discovery rules contain any requirement that parties apply to it for discovery before going into district court. Thus we are not persuaded that an affirmative BI approval requirement should be imposed.

It is, therefore, ORDERED by the court as follows: the stay pending appeal of further proceedings to enforce the discovery orders of the district court in No. 79-1026 shall continue in effect with respect to appellant Braddick and is VACATED with respect to Hayden. The temporary stay granted in No. 79-1407 is VACATED.