KNAUF INSULATION, LLC et al v. JOHNS MANVILLE CORPORATION, et al., No. 1:2015cv00111 - Document 883 (S.D. Ind. 2022)
Court Description: ORDER ON DEFENDANTS' RULE 72 OBJECTION TO MAGISTRATE JUDGE'S ORDER DENYING MOTION TO COMPEL, AND MOTION FOR ORAL ARGUMENT - This matter is before the Court on Defendant Johns Manville Corporation and Johns Manville, Inc.'s Rule 72 Obj ection to Magistrate Judge's Order Denying Motion to Compel (Filing No. 763 ). Plaintiffs Knauf Insulation LLC, Knauf Insulation GmbH, and Knauf Insulation SPRL initiated this action against JM asserting claims of patent infringement. The parti es have amended their pleadings numerous times and have engaged in significant discovery, including discovery disputes. One such discovery dispute is JM's motion to compel discovery regarding the inventorship of the asserted "D'670 de sign patent." The Court referred that motion to the Magistrate Judge for a decision. The Magistrate Judge issued an Order denying the motion to compel discovery regarding the inventorship of the asserted D'670 design patent (Filing No. [74 7]). Thereafter, JM filed the pending Rule 72 Objection to Magistrate Judge's Order Denying Motion to Compel (Filing No. 763 ). JM's Rule 72 Objection to Magistrate Judge's Order Denying Motion to Compel (Filing No. 763 ) is OVERRULED, and the Motion for Oral Argument (Filing No. 784 ) is DENIED AS MOOT. (See Order). Signed by Judge Tanya Walton Pratt on 6/10/2022. (AKH)
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KNAUF INSULATION, LLC et al v. JOHNS MANVILLE CORPORATION, et al. Doc. 883 Case 1:15-cv-00111-TWP-MJD Document 883 Filed 06/10/22 Page 1 of 9 PageID #: 30139 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF INDIANA INDIANAPOLIS DIVISION KNAUF INSULATION, LLC, KNAUF INSULATION GmbH, and KNAUF INSULATION SPRL, Plaintiffs, v. JOHNS MANVILLE CORPORATION, and JOHNS MANVILLE, INC., Defendants. ) ) ) ) ) ) ) ) ) ) ) ) Case No. 1:15-cv-00111-TWP-MJD ORDER ON DEFENDANTS' RULE 72 OBJECTION TO MAGISTRATE JUDGE'S ORDER DENYING MOTION TO COMPEL, AND MOTION FOR ORAL ARGUMENT This matter is before the Court on Defendant Johns Manville Corporation and Johns Manville, Inc.'s (collectively, "JM") Rule 72 Objection to Magistrate Judge's Order Denying Motion to Compel (Filing No. 763). Plaintiffs Knauf Insulation LLC, Knauf Insulation GmbH, and Knauf Insulation SPRL (collectively, "Knauf") initiated this action against JM asserting claims of patent infringement. The parties have amended their pleadings numerous times and have engaged in significant discovery, including discovery disputes. One such discovery dispute is JM's motion to compel discovery regarding the inventorship of the asserted "D'670 design patent." The Court referred that motion to the Magistrate Judge for a decision. The Magistrate Judge issued an Order denying the motion to compel discovery regarding the inventorship of the asserted D'670 design patent (Filing No. 747). Thereafter, JM filed the pending Rule 72 Objection to Magistrate Judge's Order Denying Motion to Compel (Filing No. 763). For the reasons stated below, the Court overrules JM's Objection to the Magistrate Judge's Order. Dockets.Justia.com Case 1:15-cv-00111-TWP-MJD Document 883 Filed 06/10/22 Page 2 of 9 PageID #: 30140 I. LEGAL STANDARD A district court may refer for decision a non-dispositive pretrial motion to a magistrate judge under Federal Rule of Civil Procedure 72(a). Rule 72(a) provides: When a pretrial matter not dispositive of a party's claim or defense is referred to a magistrate judge to hear and decide, the magistrate judge must promptly conduct the required proceedings and, when appropriate, issue a written order stating the decision. A party may serve and file objections to the order within 14 days after being served with a copy. A party may not assign as error a defect in the order not timely objected to. The district judge in the case must consider timely objections and modify or set aside any part of the order that is clearly erroneous or is contrary to law. After reviewing objections to a magistrate judge's order, the district court will modify or set aside the order only if it is clearly erroneous or contrary to law. The clear error standard is highly differential, permitting reversal of the magistrate judge's ruling only when "the district court is left with the definite and firm conviction that a mistake has been made." Weeks v. Samsung Heavy Indus. Co., 126 F.3d 926, 943 (7th Cir. 1997). "An order is contrary to law when it fails to apply or misapplies relevant statutes, case law, or rules of procedure." Coley v. Landrum, 2016 U.S. Dist. LEXIS 13377, at *3 (S.D. Ind. Feb. 4, 2016) (citation and quotation marks omitted). The federal discovery rules are liberally construed. Spier v. Home Ins. Co., 404 F.2d 896, 899 (7th Cir. 1968). "The attorney-client privilege is the oldest of the privileges for confidential communications known to the common law. Its purpose is to encourage full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance of law and administration of justice." Upjohn Co. v. United States, 449 U.S. 383, 389 (1981) (internal citation omitted). Magistrate judges (and district judges) "enjoy extremely broad discretion in controlling discovery." Jones v. City of Elkhart, 737 F.3d 1107, 1115 (7th Cir. 2013). 2 Case 1:15-cv-00111-TWP-MJD Document 883 Filed 06/10/22 Page 3 of 9 PageID #: 30141 II. DISCUSSION Plaintiffs Knauf are manufacturers and suppliers of, among other things, fiber glass insulation products for the residential and commercial markets. Defendants JM are direct competitors. The asserted patents in this matter relate to insulation for buildings. In its motion to compel, JM sought to compel discovery regarding the inventorship of the asserted D'670 design patent, which depicts a piece of insulation that resulted from using a sugar-binder described in the utility patents. In 2005, Knauf employee Dr. Brian Swift ("Dr. Swift") developed a sugar-based insulation binder for Knauf, and Knauf filed a provisional utility patent application claiming the binder in July 2005. After Dr. Swift left Knauf in 2007, Dr. Roger Jackson ("Dr. Jackson") led a team of Knauf employees who worked to improve the appearance of the insulation made with a later version of the binder. On December 31, 2008, Knauf filed an application for the D'670 patent. The application named Dr. Jackson as the sole inventor and included a photograph that showed the appearance of the insulation product that the design patent embodied. The photographed insulation product was manufactured after Dr. Swift left Knauf. During the prosecution of the D'670 patent, Knauf submitted a declaration from Dr. Jackson explaining that he was the original and first inventor of the subject matter. On January 27, 2015, Knauf filed this patent infringement case. In November 2017, JM asserted in its counterclaims that the D'670 patent is unenforceable because of inequitable conduct by Knauf before the United States Patent and Trademark Office (the "PTO"). JM alleges that Knauf withheld prior art—the brown insulation made by Dr. Swift in 2005—from the PTO, and if the PTO had been aware of Dr. Swift's prior art, the PTO would not have issued the design patent. Thereafter, on July 3, 2018, Knauf filed a request for certificate of correction with the PTO, seeking 3 Case 1:15-cv-00111-TWP-MJD Document 883 Filed 06/10/22 Page 4 of 9 PageID #: 30142 to change the inventor on the D'670 patent from Dr. Jackson to Dr. Swift on the basis that naming Dr. Jackson as the inventor was an error. Dr. Jackson and Dr. Swift submitted statements in support of the request for certificate of correction indicating that they either agreed to the change of inventorship or had no disagreement in regard to the requested change. JM sought discovery regarding the inventorship of the asserted D'670 design patent and the change of inventorship and correction before the PTO. Knauf responded to the discovery requests but also raised the attorney-client privilege to withhold information. JM then filed a motion to compel, asking the Court to compel Knauf to produce discovery regarding the inventorship of the asserted D'670 design patent that Knauf withheld as privileged. The Magistrate Judge denied the motion to compel, determining that Knauf had not put at issue any attorney-client communications that would have waived the privilege (Filing No. 747). In its Rule 72 Objection to the Magistrate Judge's Order denying the motion to compel, JM asserts that the Order is clearly erroneous because it failed to apply controlling Federal Circuit case law regarding the test for waiver of the attorney-client privilege. Citing Zenith Radio Corp. v. United States, 764 F.2d 1577 (Fed. Cir. 1985), JM argues the Federal Circuit adopted the Hearn test for determining whether the attorney-client privilege has been waived. Under the Hearn test, waiver exists if "(1) assertion of the privilege was a result of some affirmative act, such as filing suit, by the asserting party; (2) through this affirmative act, the asserting party put the protected information at issue by making it relevant to the case; and (3) application of the privilege would have denied the opposing party access to information vital to his defense." Id. (quoting Hearn, 68 F.R.D. at 581). The Hearn test "denies a plaintiff the privilege if he places the matter subject to the privilege in issue and the information is vital to the defendant's case." Afro-Lecon, Inc. v. United States, 820 F.2d 1198, 1204-05 (Fed. Cir. 1987) (emphasis added); see also Hearn v. Rhay, 68 F.R.D. 574 (E.D. Wash. 1975). (Filing No. 764 at 14.) Two years after Zenith, the Federal Circuit expressly adopted the Hearn test as its standard for determining privilege waiver, pointing to Afro-Lecon, 820 F.2d at 1205. JM 4 Case 1:15-cv-00111-TWP-MJD Document 883 Filed 06/10/22 Page 5 of 9 PageID #: 30143 argues that the Federal Circuit in Winbond Elecs. Corp. v. ITC, 2001 U.S. App. LEXIS 25113 (Fed. Cir. Aug. 22, 2001), applied the Hearn test when it affirmed the International Trade Commission's underlying decision applying the Hearn test. And numerous other courts have applied the Hearn test when applying Federal Circuit law. JM asserts that, had the Magistrate Judge properly applied the Hearn test factors, the motion to compel would have been granted. JM also criticizes the Magistrate Judge's Order for citing non-patent cases when determining that the attorney-client privilege had not been waived and for distinguishing some of JM's case law based upon an amendment to 35 U.S.C. § 256. After reviewing the parties' briefing and arguments for the pending Rule 72 Objection as well as the briefing and arguments for the underlying motion to compel and the cited case law, the Court concludes that the Magistrate Judge's Order does not commit error that warrants a modification. The Magistrate Judge correctly determined that the Federal Circuit did not adopt the Hearn test as the exclusive test for determining whether the attorney-client privilege has been waived. The Federal Circuit explained in Zenith, The government contends that the proper standard for this case is the balancing test rather than the Hearn test . . . . We find it unnecessary to decide which of these two standards is appropriate in this case, since we conclude that under either standard the government's claim of privilege should have been allowed. Zenith, 764 F.2d at 1580 (emphasis added). The Federal Circuit further explained, "Under both the balancing test and Hearn, the party seeking the information must make a strong showing of need in order to breach the privilege." Id. (emphasis added). Zenith did not establish the Hearn test as the exclusive test for determining attorney-client privilege waiver. JM is correct that two years after Zenith, the Federal Circuit expressly adopted the Hearn test as its standard for determining privilege waiver, pointing to Afro-Lecon. However, the Federal Circuit did not establish the Hearn test as the exclusive test for privilege waivers in Afro-Lecon. 5 Case 1:15-cv-00111-TWP-MJD Document 883 Filed 06/10/22 Page 6 of 9 PageID #: 30144 For that particular case, the Federal Circuit decided to apply the balancing approach suggested in Hearn: "We believe that this approach is too rigid and choose instead the balancing approach suggested in Hearn and elsewhere. This is particularly appropriate where the civil case is not in court . . . ." Afro-Lecon, 820 F.2d at 1205. The Court notes that JM criticizes the Magistrate Judge's Order for citing non-patent cases when he determined that the attorney-client privilege had not been waived. Yet, two of the primary cases upon which JM most heavily relies are not patent cases. Afro-Lecon is not a patent case and did not involve the attorney-client privilege, and Zenith is not a patent case. JM also relies heavily on the Winbond case for its argument that the Hearn test is the test of the Federal Circuit. But as the Magistrate Judge correctly observed, Winbond did not establish the Hearn test as the exclusive test for determining privilege waiver in the Federal Circuit because the party had conceded waiver: "On appeal, Atmel concedes that it waived its attorney-client privilege and work product protection." Winbond, 2001 U.S. App. LEXIS 25113, at *31. That the underlying decision of the International Trade Commission applied the Hearn test does not lead to the conclusion that the Federal Circuit established in Winbond that the Hearn test is the exclusive test for determining privilege waiver. JM points to numerous decisions from the Court of Federal Claims in support of his argument that the Hearn test is the test of the Federal Circuit. But as counsel knows, the Court of Federal Claims is not the same as the Federal Circuit, and the Court of Federal Claims does not establish binding precedent for this Court. And that court even acknowledged there is no binding precedent from the Federal Circuit regarding application of the Hearn test or a different test. "In the absence of binding precedent on the issue of the appropriate standard to apply in evaluating the existence of an at-issue implied waiver, the court joins with the Blue Lake Forest Products, 6 Case 1:15-cv-00111-TWP-MJD Document 883 Filed 06/10/22 Page 7 of 9 PageID #: 30145 Inc. court in adopting the Hearn standard as a reasonable approach." Eden Isle Marina, Inc. v. United States, 89 Fed. Cl. 480, 503 (2009) (emphasis added). The Court concludes that it was an incorrect statement in Blue Lake Forest Prods. v. United States, 75 Fed. Cl. 779 (2007) and UUSI, LLC v. United States, 121 Fed. Cl. 218 (2015)—two decisions issued by the same judge—that the Hearn test was adopted by the Federal Circuit in Zenith. Under the Hearn test that JM advocates, privilege waiver exists if three conditions are met—one of which requires that the protected information be put at issue. The Magistrate Judge concluded that Knauf did not put at issue its attorney-client communications. Thus, with one of the conditions for waiver not being met, the Magistrate Judge concluded that the privilege remained in place to preclude discovery. While the Magistrate Judge did not address the "at issue" element within the context of the Hearn test as JM desires, the Court sees no legal or factual error in the Magistrate Judge's decision. Therefore, the Court concludes that the Magistrate Judge's Order Denying Motion to Compel need not be disturbed. After JM filed its reply brief in support of its Rule 72 Objection, JM also filed a Motion for Oral Argument on the Rule 72 Objection (Filing No. 784). The Court determines that the parties' briefing was sufficient to address the issues, and there is no need for oral argument on the Rule 72 Objection, so the Motion for Oral Argument is denied. III. CONCLUSION For the foregoing reasons, JM's Rule 72 Objection to Magistrate Judge's Order Denying Motion to Compel (Filing No. 763) is OVERRULED, and the Motion for Oral Argument (Filing No. 784) is DENIED AS MOOT. SO ORDERED. Date: 6/10/2022 7 Case 1:15-cv-00111-TWP-MJD Document 883 Filed 06/10/22 Page 8 of 9 PageID #: 30146 DISTRIBUTION: Brett J. Arnold Quinn Emanuel Urquhart & Sullivan LLP brettarnold@quinnemanuel.com Blake R. Hartz WOODARD EMHARDT HENRY REEVES & WAGNER, LLP bhartz@uspatent.com Melissa J. Baily QUINN EMANUEL URQUHART & SULLIVAN, LLP melissabaily@quinnemanuel.com Valerie Anne Lozano, I Quinn Emanuel Urquhart& Sullivan valerielozano@quinnemanuel.com Kevin M. Bell KILPATRICK TOWNSEND & STOCKTON LLP kbell@kilpatricktownsend.com Daniel James Lueders WOODARD EMHARDT HENRY REEVES & WAGNER, LLP lueders@uspatent.com Spiro Bereveskos Woodard Emhardt Henry Reeves & Wagner, LLP judy@uspatent.com Brice C. Lynch QUINN EMANUEL URQUHART & SULLIVAN, LLP bricelynch@quinnemanuel.com Briana Lynn Clark DENTONS BINGHAM GREENEBAUM LLP (Indianapolis) briana.clark@dentons.com Edward J. Mayle KILPATRICK TOWNSEND & STOCKTON LLP TMayle@kilpatricktownsend.com Lindsay Cooper QUINN EMANUEL URQUHART & SULLIVAN, LLP lindsaycooper@quinnemanuel.com Kristopher L. Reed KILPATRICK TOWNSEND & STOCKTON LLP kreed@kilpatricktownsend.com Hannah Elizabeth Dawson Quinn Emanuel Urquhart & Sullivan, LLP hannahdawson@quinnemanuel.com James W. Riley, Jr. RILEY BENNETT EGLOFF LLP jriley@rbelaw.com Duane R. Denton DENTONS BINGHAM GREENEBAUM LLP (Indianapolis) rusty.denton@dentons.com Charles Verhoeven QUINN EMANUEL URQUHART & SULLIVAN, LLP charlesverhoeven@quinnemanuel.com David D. Doak QUINN EMANUEL URQUHART & SULLIVAN, LLP daviddoak@quinnemanuel.com Scott Watson QUINN EMANUEL URQUHART OLIVER & HEDGES scottwatson@quinnemanuel.com 8 Case 1:15-cv-00111-TWP-MJD Document 883 Filed 06/10/22 Page 9 of 9 PageID #: 30147 Jaclyn Michelle Flint RILEY BENNETT EGLOFF LLP jflint@rbelaw.com Travis D. Whitsitt KILPATRICK TOWNSEND & STOCKTON LLP twhitsitt@kilpatricktownsend.com Matthew M. Gardlik WOODARD EMHARDT HENRY REEVES & WAGNER, LLP mgardlik@uspatent.com Lance Yang QUINN EMANUEL URQUHART & SULLIVAN, LLP lanceyang@quinnemanuel.com Ella K. Hallwass QUINN EMAUEL URGUHART & SULLIVAN LLP ellahallwass@quinnemanuel.com 9
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