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In Re Heraeus Kulzer Gmbh

August 2, 2011

IN RE HERAEUS KULZER GMBH, PETITIONER,


The opinion of the court was delivered by: Rufe, J.

For an Order to Take Discovery of Respondent Esschem, Inc., For Use in Foreign Proceedings : Pursuant to 28 U.S.C. § 1782

MEMORANDUM OPINION AND ORDER

This action came before the Court on the Application of Heraeus Kulzer GmbH ("Heraeus") for an Order to take discovery for use in foreign litigation in Darmstadt, Germany ("German Action") pursuant to 28 U.S.C. § 1782. *fn1 Petitioner Heraeus is a German company in the business of producing and developing bone cement. In the German Action, Heraeus has sued Biomet, Inc. and related companies ("Biomet"), *fn2 seeking redress for alleged misappropriation of its trade secrets. In this Court, Heraeus seeks discovery from Respondent, Esschem, Inc. ("Esschem"), a company with its principal place of business in this judicial district, which manufactured the specialized materials (copolymers) used in Biomet's bone cement. Although Esschem is not a party to the German Action, Heraeus believes Esschem possesses compelling evidence that Biomet misappropriated Heraeus's trade secrets. In particular, Heraeus contends that Esschem produced bone cement materials (certain copolymers) for Biomet according to specifications Biomet had stolen from Heraeus. Therefore, Heraeus believes that discovery from Esschem will help it prove that Biomet stole and used Heraeus's trade secrets in the German Action.

BACKGROUND

On February 24, 2009, *fn3 the Court granted Heraeus's Application for Discovery, and authorized Heraeus to serve a subpoena for documents and information upon Esschem and to take depositions. By the same Order, the Court adopted and imposed a protective order regarding access to and disclosure of confidential information in this matter.

Heraeus served the subpoena on Esschem, and in response Esschem filed a motion to quash. *fn4

On September 11, 2009, the Court issued a Memorandum Opinion and Order which held that the discovery request met the fundamental requirements of § 1782 and was not unduly burdensome, especially in light of voluntary concessions from Heraeus regarding the scope of discovery and the disclosure that Biomet was indemnifying Esschem for its litigation costs. Despite these findings, the Court granted Esschem's Motion to Quash the subpoena seeking trade secrets or other confidential information, because it found that Heraeus had not demonstrated a substantial need to obtain confidential documents from Esschem, as is required by Rule 45, where it seemed likely that Heraeus could obtain the same documents from Biomet, a party to the German Action, in Indiana and in Germany. *fn5 Heraeus appealed this decision to the Third Circuit, which approved this Court's ruling but, based upon later-occurring events, *fn6 vacated and remanded the case to this Court with

Case 2:09-mc-00017-CMR Document 82 Filed 08/02/11 Page 3 of 9

instructions to grant Heraeus's modified discovery requests. *fn7

Discovery has proceeded in this Court, on an expedited basis, duly narrowed and accompanied by protective orders. Although Heraeus has obtained most of the discovery it seeks from Esschem, and counsel for the parties have made every effort to resolve discovery disputes without this Court's intervention, there are three outstanding discovery requests to which Esschem has not agreed: 1) a Rule 30(b)(6) deposition, which Heraeus alleges it needs to form a complete picture of the communications between Esschem and Biomet about production of the product at issue, in light of gaps in produced e-mail correspondence between Biomet and Esschem; 2) removal of redactions in certain documents produced; and 3) a complete set of Esschem's Certificates of Analysis for the copolymers at issue in the German Action.

STANDARD OF REVIEW

The Court must first determine whether Esschem has shown that the information Heraeus seeks is subject to privilege or other protection, such as trade-secret protection. *fn8 If Esschem has so shown, Heraeus must demonstrate a "substantial need for the testimony or material, that cannot be otherwise met without undue hardship." *fn9 In analyzing the discovery requests, this Court also considers the fact that all discovery in this case is subject to a protective order, minimizing the potential negative consequences of disclosure. *fn10

DISCUSSION

Information Sought is Confidential or a Trade Secret Heraeus argues that the information it seeks from Esschem is not confidential, because it has been provided to Biomet and to aap (another company with which Esschem works) without strict confidentiality agreements in place between the parties to protect it. The Court addressed and rejected this argument in its Memorandum Opinion and Order dated September 11, 2009, and finds Heraeus still cannot satisfy the Court that Esschem's confidentiality claims are not credible. Consistent with this Court's prior ruling on this matter, Esschem's information has been treated as confidential throughout this litigation and disclosures have been produced pursuant to a protective order. The Court will not disrupt its prior holdings ...


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